Ask Question
BusinessBusiness
8 May, 22:26

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. True or False?

+4
Answers (1)
  1. 9 May, 00:49
    0
    False

    Explanation:

    If the demand is uncertain, if you use average demand to calculate the economic order quantity (EOQ), you will have a high probability of a stock-out occurring.

    EOQ = √ (2DS / H)

    where:

    D = annual demand in units

    S = order cost per purchase order

    H = holding cost per unit, per year

    If D is uncertain, then the whole calculus will either be understated or overstated.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “In a fixed-order-quantity system, when demand is uncertain, using economic order quantity (EOQ) based only on the average demand will ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Use this information about Department A to answer the question that follow. Department A had 4,200 units in Work in Process that were 76% completed as to labor and overhead at the beginning of the period.
Answers (1)
Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.
Answers (1)
What types of groups/teams are used at the Ritz-Carlton Hotels?
Answers (1)
What is a trade union?
Answers (2)
The marketing department has just forecasted that 15,000 units of item #780 will be ordered in the next fiscal year. Based on the marketing department's forecast and noting that the seasonal relative associated with the second fiscal quarter is 1.
Answers (1)
New Questions in Business
Which decision-making style is also referred to as the ostrich style? The decision-making style of a (an) * blank * is also referred to as the ostrich style. -evader -agonizer
Answers (2)
What are the characteristics of production possiblity frontier
Answers (1)
What is the remaining balance on a 30-year, $400,000 mortgage after 70 months? Assume monthly payments and a nominal rate (monthly compounding) of 5.90%.
Answers (1)
Which government behavior is not involved in consumer-protection regulations?
Answers (1)
Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. how many people are in the working-age population in this economy?
Answers (1)
Home » Business » 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. True or False?
Sign Up Forgot Password?