Consider the following assumptions of the EOQ model assumptions:
The ordering cost is constant.
The rate of demand is known and spread evenly throughout the year.
The lead time is fixed.
The purchase price of the item is constant (i.e., no discount is available).
The replenishment is made instantaneously; the whole batch is delivered at once.
Only one product is involved.
1. Do you think these assumptions are realistic, or is the EOQ model an outdated technique for inventory control? If so, why? If not, why not?
2. Could the model be modified to fit the needs of specific businesses?
This question was asked on Jul 05, 2012.
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