In the EOQ model,the optimal order quantity is the amount at which ______.
A)the total annual ordering costs are at a minimum
B)the total holding costs are at a minimum
C)the sum of the total annual ordering costs and the total annual holding costs is at a minimum
D)the difference between the total annual ordering costs and the total annual holding costs is at a maximum

Question

Quizplus · Accepted Answer

The EOQ model seeks to minimize the total cost of inventory management, which includes both ordering costs (the cost of placing a new order) and holding costs (the cost of keeping inventory in stock). The optimal order quantity is the point at which the sum of these costs is at its lowest. Therefore, the correct choice is C - the sum of the total annual ordering costs and the total annual holding costs is at a minimum.

In the EOQ Model,the Optimal Order Quantity Is the Amount