Which of the following is NOT an assumption of the Economic Order Quantity (EOQ) model?

• A. Demand is constant and known
• B. Orders are received instantaneously
• C. Lead time is variable and unpredictable
• D. No quantity discounts are available

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the EOQ model assumptions. The EOQ model is a fundamental inventory management tool that helps determine the optimal order quantity minimizing total inventory costs.
2. Step 2: Recall the key assumptions of the EOQ model: (a) Demand is constant and known, (b) Orders are received instantaneously (no delay in delivery), (c) No quantity discounts are available, and (d) Lead time is constant and known (not variable).
3. Step 3: Analyze the given options against these assumptions. The first three options align with EOQ assumptions: constant demand, instantaneous receipt, and no quantity discounts.
4. Step 4: Identify that 'Lead time is variable and unpredictable' contradicts the EOQ assumption that lead time is constant and known, making it NOT an assumption of the EOQ model.
5. Step 5: Conclude that the correct answer is the option stating 'Lead time is variable and unpredictable' because EOQ requires lead time to be constant and predictable.