i. Demand is constant and knows in advance with certainty.
ii. Lead time is constant and known in advance with certainty.
iii. All costs involved are known with certainty and they don't change i.e. purchase cost, holding
cost and ordering cost.
iv. There are no shortages as per assumption (i) and (ii)
v. There are no quantity discounts, thus purchase cost will not be a relevant factor in inventory
policy determination.
vi. Ordering cost is fixed irrespective of the size of the order.
vii. Replenishment of items is in equal batches
viii. Holding cost is a linear function of quantity of average stock.
marto answered the question on February 26, 2019 at 08:56
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