Question

Which statement about EOQ is false? O EOQ will increase as annual demand (A) increases. EOQ decreases as inventory carrying costs decrease. O EOQ Yncreases as item unit cost (c) decreases. EOQ attempts to minimize the total cost of carrying and ordering inventory.

All are steps to improve the performance of an operation EXCEPT: A) Subordinate everything to the constraint. OB) Once the constraint is no longer a constraint, your work is done. OC ) Elevate the constraint . OD ) Identify the constraint E) Exploit the constraint .

Which statement is true? OA) Deseasonalized data should not be used for forecasting OB) Forecast seasonalized demand, not deseasonalized demand. OC) Actual demand is calculated from seasonal demand. D) Calculate the seasonal forecast by applying the seasonal index to the base (deseasonalized) forecast. OE) None of the above are true statements.

Answer 1

Economic order quantity ( EOQ ) was developed in 1913 by Ford W. Harris . EOQ is the optimum quantity of a product which a company should purchased to minimize total inventory cost . Two type of costs are related to it i.e.,  Holding cost ( Rent , Deterioration , Shortage cost ) and Ordering cost . Symbolically , EOQ is the point where

Inventory Holding (carrying ) cost = Ordering cost

Question :   Which statement about EOQ is false?

Solution : The ( B ) statement would be false i.e.,  EOQ decreases as inventory carrying costs decrease .

Because to holding Inventory (carrying the raw material ) cost , huge amount will have to pay which ultimately raise the per unit cost of material . So, it will reduce the profits and finally decrease the EOQ .