The basic eoq model-the deterministic models, Managerial Accounting

THE BASIC EOQ MODEL

This is the most simple of all the models discussed. In addition to the general assumptions which relate to all deterministic models (i.e. certainty of all parameters) it is further assumed that:

a. Demand is continuous and constant over time.
b. That suppliers lead time is zero i.e. stocks are delivered immediately on the day the order is made.
c. That stock-outs are not permitted.
d. There are no massiveness quantity discounts.
e. Holding costs per unit, ordering costs per order and costs per unit are constant.
   
Relevant costs of basic EOQ model:

The related costs that must be considered when determining optimum inventory levels can be classified into two categories:

(i) Ordering costs.
(ii) Holding (Carrying) Costs.

That is, TC = Ordering Costs + Holding Costs

Posted Date: 12/6/2012 5:58:19 AM | Location : United States







Related Discussions:- The basic eoq model-the deterministic models, Assignment Help, Ask Question on The basic eoq model-the deterministic models, Get Answer, Expert's Help, The basic eoq model-the deterministic models Discussions

Write discussion on The basic eoq model-the deterministic models
Your posts are moderated
Related Questions
Basic Assumption of Transportation Model The basic assumption of the model is that the transportation cost on a given route is directly proportional to the number of units tran

Describe the important role that the corporate level strategy has in relation to the development of the business and functional strategy in a multi -business organization

Open Account Credit sales are usually on open account that implies which the seller ships the goods to the buyer and afterward sends the bill invoice. Consignment In th

A managerial accounting strategy focusing mainly on maintaining efficient levels of both components of working capital that is current assets and current liabilities, with respect

Assumptions Underlying the CVP Analysis CVP analysis as discussed above is based on certain assumptions . if these assumptions are not recognized then serious error may result

Explain the growth, index, sectoral, gilt and money market methods? (i) What are the key variations among the open ended and close ended methods? What are the plus and minuses

Analysis of Credit File: Credit file is a compilation of each the relevant credit information of the customer. All the credit information collected throughout the credit informati

Determine the Scope and areas of cost reduction Scope and areas of cost reduction the scope of cost reduction is so wide that it is not practicable to develop fully the areas i

IF net income totaled $18,000 for one year, beginning assets were $100.000 and ending assets were $140,000, then Return on Assets for the year as a percentage will be?

What is Programmer budgeting It is a combination of programming and systems refers to the activity and system analysis refers to cost benefit analysis or operations research. I