Please comment on my answer, what do you think? I need insight,thank you!
Q: Answer both questions below about the EOQ model.
(a) In the EOQ model, unit product cost or selling price, C, isnot included in the formula we use to solve for the economic orderquantity. Explain why it is not necessary to include thisinformation in the EOQ formula.
(b) What are the major limitations of the EOQ model?
A:
A). In the EOQ model, C is not included because unit productcost and/or selling price is assumed to be constant. With thisassumption of course, trade discounts and other discounts are notaccounted for.
B). The limitations of this model are that it does not accountfor trade discounts, fluctuations in demand, and any externalfactor that is not reasonably predictable such as competitors,substitutes, etc.
