The economic order quantity is the order size that minimizes holding cost plus stockout cost.

Name: The economic order quantity is the order size that minimizes holding cost plus stockout cost.
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Question

Quizplus · Accepted Answer

The economic order quantity (EOQ) is the order size that minimizes the total cost of ordering and holding inventory. The total cost includes not only holding cost, but also ordering cost and stockout cost. Therefore, the EOQ considers all relevant costs in determining the optimal order quantity.

The Economic Order Quantity Is the Order Size That Minimizes