How does the EOQ with usage differ from the standard EOQ? Why is this difference important to the small business owner?
What will be an ideal response?
Answer: The EOQ model assumes that orders are filled instantaneously; that is, fresh inventory arrives all at once. Because that assumption does not hold true for many small manufacturers, it is necessary to consider a variation of the basic EOQ model that allows inventory to be added over a period of time rather than instantaneously. In addition, a manufacturer is likely to be taking items from inventory for use in the assembly process over the same time period. The key feature of this version of the EOQ model is that inventories are used while inventories are being added.
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What will be an ideal response?
Which type of economy consumes most of its output and barters the rest for simple goods and services?
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