The Gregory Hospital Group would like to use the economic order quantity (EOQ) m

Question

The Gregory Hospital Group would like to use the economic order quantity (EOQ) model to manage their inventory of needles used in
care operations of intensive care patients. However, they are in need of more understanding of the constraints and goals of using this
model. Which of the following statements correctly states assumptions and goals of the EOQ model?
Using EOQ assumes that demand and lead-time are held constant through the order cycle
EOQ assumes that each unit that is ordered will be used, and thus, overstocking will not be an issue.
EOQ seeks to compute an order quantity such that total order and holding costs are equal.
Only a & c are correct
All of the above statements are correct

Explanation / Answer

Economic order quantity is the order quantity which minimizes sum of annual ordering cost as well as inventory holding cost. It is also true that at EOQ . Annual ordering cost equals annual holding cost. It is also essential that average demand and lead time to be kept constant for calculation of EOQ .EOQ is ordered based on demand pattern and therefore every item which is ordered as per EOQ plan will be consumed. In order to tackle exigency, an organization might maintain a safety stock in addition to EOQ .

On basis of above explanations , we can say “ All of the above statements are correct :

ANSWER : ALL OF TH ABOVE ABOVE STATEMENTS ARE CORRECT

ANSWER : ALL OF TH ABOVE ABOVE STATEMENTS ARE CORRECT

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