Question

the basic EOQ model considers basic ordering and holding cost that might affect inventory decisions. identify some other costs that may affect inventory decisions. discuss an advanced modeling approach that considers those costs.

Answer 1

Some of the other models consider different inventory considerations. The economic order quantity model assumes that an entire order will be received at one time, but this is not the case for many companies. The production order quantity model can be sued for circumstances

economic order quantity model assumes that demand for an item is known, reasonably consistent, and independent of decisions for other items. That the lead time is known and consistent. That receipt of inventory is instantaneous and complete. That quantity discounts are not possible. That the only variable costs are the costs of setting up and placing an order and the And the cost of holding or storing inventory over time, and finally that stock outs can be completely avoided if orders are placed at the right time .