Question

Based on the constant demand assumption in the economic order quantity (EOQ) model, the average cycle inventory is:____________

A) the order quantity divided by the number of inventory cycles per year.
B) the annual demand divided by the number of inventory cycles per year.
C) half of the order quantity.
D) half of the annual usage.

Answer 1

C) half of the order quantity

Step-by-step explanation:

The constant demand assumption in the economic order quantity (EOQ) model permits that there should be a minimum number of goods any company should purchase in order to help minimize different types of costs accrued through this system.

Based on the constant demand assumption in the economic order quantity (EOQ) model, the average cycle inventory is half of the order quantity.