If no safety stock is carried,the average inventory is equal to the
A)order point/2.
B)order point ´ 2.
C)economic order quantity/2.
D)economic order quantity ´ 2.

Question

Quizplus · Accepted Answer

The economic order quantity (EOQ) is the optimal order quantity that minimizes total inventory costs, including ordering costs and holding costs. If no safety stock is carried, the average inventory level will fluctuate between zero and the EOQ. The average inventory can be calculated as EOQ/2, as this represents the midpoint of the inventory level over the course of a cycle. Therefore, the correct choice is C.

If No Safety Stock Is Carried,the Average Inventory Is Equal