QUESTION THREE a) To calculate the E.O.Q a mathematical model of reality must be constructed I all mathematical models make assumptions that simplify reality. What are the basic E.O.Q model assumption. [10 Marks]

The question is asking about the basic assumptions of the Economic Order Quantity (E.O.Q) model. The E.O.Q model is a mathematical model used in operations management and logistics to determine the optimal order quantity that minimizes total inventory costs. This model assumes the following:<br /><br />1. Demand is known with certainty and is constant over time.<br />2. Lead time is constant and known with certainty.<br />3. There is no backorder allowed.<br />4. The ordering cost is constant for all orders.<br />5. The holding cost is constant per unit per year.<br /><br />These assumptions simplify the real-world scenario to make the mathematical model feasible and solvable. However, it's important to note that these assumptions may not always hold true in real-world situations, but the E.O.Q model provides a good approximation under these assumptions.