EOQ should be used if you use a make-to-order strategy and the customer specifies that the entire order be delivered in one shipment.

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The question presents a statement about when EOQ should be used in relation to a make-to-order strategy and a single shipment requirement. 
Option 1: True. This claim would assert that EOQ is the appropriate method under these conditions. In practice, EOQ assumes relatively stable, independent demand, known periodicity, and that orders replenish inventory in a regular, ongoing cycle. A make-to-order (MTO) strategy, by contrast, starts production after a customer order, often with variable lead times and customized specifications. Requiring the entire order to be delivered in one shipment does not align neatly with the continuous-quantity optimization that EOQ provides, since EOQ optimizes order size for ongoing, repetitive replenishment rather than one-off, customized builds. Therefore, describing EOQ as the appropriate method in this MTO, single-shipment scenario is misleading. This reasoning makes Option 1 incorrect. 
Option 2: False. The core issue is that EOQ is designed for independent, steady demand and regular replenishment cycles, not for make-to-order processes where production begins after the order and customization may disrupt a stable replenishment pattern. In an MTO setting, inventory is typically managed differently (e.g., using lot-for-lot sizing or other lot-sizing rules that tie directly to specific customer orders and lead times), and forcing a single shipment does not convert the situation into one where EOQ is optimal. Thus, describing EOQ as the correct approach under these conditions is not accurate. 
In summary, the statement conflates EOQ assumptions with an MTO and single-shipment context, and recognizing this mismatch explains why the claim is incorrect.

MGS310001.2025FA Test 03: Chap 10,11

EOQ should be used if you use a make-to-order strategy and the customer specifies that the entire order be delivered in one shipment.

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MGS*3100*01.2025FA Test 03: Chap 10,11

EOQ should be used if you use a make-to-order strategy and the customer specifies that the entire order be delivered in one shipment.

View Explanation

Log in for full answers

Similar Questions

Question at position 22 Given the following information, what is the EOQ for this company: Average demand per week = 135 The ordering cost = $135 The inventory holding rate per year = 4% Unit cost = $50 Assume 50 weeks per year975 units955 units305 units191 units

Question at position 20 The annual demand of a certain item is 5,400 units and the computed EOQ is 900 units. What will be the time between orders in months?6 months 4 months3 months 2 months

Considering the EOQ model, larger lots are justified with higher holding costs.

An item experiences an annual demand of 3,600 units. It costs $10 to hold an item in inventory for one year and $20 to place an order. If the EOQ model is used, what is the time between orders? Assume that there are 52 business weeks in a year.

The EOQ is the smallest lot size that a supplier will allow a customer to order.

More Practical Tools for Students Powered by AI Study Helper

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MGS310001.2025FA Test 03: Chap 10,11