Which of the following is notone of the assumptions of the basic eoq model?
a. annual demand requirements are known and constant.
b. lead time does not vary.
c. each order is received in a single delivery.
d. quantity discounts are available.
e. all of the above are necessary assumptions.

D. Quantity discounts are available.

Explanation:

The computation of the economic order quantity is shown below:

=

The total cost is computed below:

= Purchase cost + ordering cost + carrying cost

These three components are required to compute the total cost and for calculating the economic order quantity, the ordering cost and the carrying cost is required.

The number of orders would be equal to

= Annual demand ÷ economic order quantity

The average inventory would equal to

= Economic order quantity ÷ 2

The total cost of ordering cost and carrying cost equals to

Ordering cost = Number of orders × ordering cost per order

Carrying cost = average inventory × carrying cost per unit

No quantity discounts are available.

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