What operating model helps determine the optimum number of units to be reordered based on inventory levels, projected demand, and various associated costs?
A) Economic Order Quantity (EOQ)
B) Decision Support Systems (DSS)
C) Data Management Services (DMS)
D) Operational Forecast Systems (OFS)

Question

Quizplus · Accepted Answer

Economic Order Quantity (EOQ) is a mathematical model that helps determine the optimal number of units to be ordered based on inventory levels, projected demand, and associated costs such as ordering costs and holding costs. EOQ takes into account the trade-off between holding too much inventory, which incurs higher holding costs, and not holding enough inventory, which can result in stockouts and lost sales. DSS, DMS, and OFS may be used in the context of inventory management, but they do not specifically address the determination of optimal reorder quantities.

What Operating Model Helps Determine the Optimum Number of Units