Question

In a fixed-order-quantity system, when demand is uncertain, using economic order quantity (EOQ) based only on the average demand will result in a low probability of a stockout. a. True b. False

Answer 1

b. False

Explanation:

In a fixed-order-quantity system, when there is uncertainty in demand, the average demand will lead to a high probability of a stockout which is in contrast to what is stated in the question. Thus, the answer is false.