Final answer:
The fundamental problems of EOQ in business include scarcity, uncertainty, and cost.
Step-by-step explanation:
The fundamental problems of EOQ (Economic Order Quantity) in business include:
- Scarcity: EOQ helps businesses determine the optimal quantity to order in order to balance supply and demand. However, scarcity is a fundamental problem in economics, as resources are limited and wants are unlimited. Therefore, businesses must find ways to manage scarcity and make efficient use of resources when determining their EOQ.
- Uncertainty: EOQ models assume that demand and lead time are constant and known. However, in reality, demand and lead times often fluctuate and are uncertain. This uncertainty can lead to stockouts or excessive inventory if not properly managed.
- Cost: EOQ models take into account various costs, such as ordering costs, holding costs, and stockout costs. However, determining the accurate costs can be challenging, as costs may vary and not always be easily quantifiable. Businesses need to carefully consider and estimate these costs when calculating their EOQ.