The Economic Order Quantity (EOQ):
A) Is used to calculate how much safety stock should be carried
B) Will depend on how many related parts are required in the same period
C) Determines the lowest order quantity by balancing the cost of ordering against the cost of holding stock
D) Should be calculated once a year
E) Is a formula that calculates a realistic purchase price for an item

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) is a formula that determines the best order quantity to balance the cost of ordering against the cost of holding stock. It is not used to calculate safety stock, dependent on related parts, a purchase price for an item, and should not be calculated only once a year.