The economic order quantity is the minimum point on the total cost curve. This is the order quantity (or re-order quantity) that will minimize:
A) ordering costs
B) carrying costs
C) combined ordering costs and carrying costs.
D) warehousing costs

Question

Quizplus · Accepted Answer

The economic order quantity takes into account both the ordering costs and the carrying costs in order to minimize the total cost. Choosing either only ordering costs (A) or only carrying costs (B) will not result in the minimum total cost. Warehousing costs (D) may be a component of carrying costs but are not the only factor to consider.

The Economic Order Quantity Is the Minimum Point on the Total