The EOQ model is a mathematical tool for:
A)determining the order quantity that minimizes the costs of holding inventory.
B)determining the order quantity that minimizes the costs of ordering inventory.
C)determining the order quantity that maximizes the costs of holding inventory.
D)determining the order quantity that maximizes the costs of ordering and holding inventory.
E)determining the order quantity that minimizes the costs of ordering and holding inventory.

Question

Quizplus · Accepted Answer

The EOQ model (Economic Order Quantity) determines the order quantity that minimizes the total costs of ordering and holding inventory. This includes the costs of ordering (setup costs, shipping costs) and the costs of holding inventory (storage costs, potentially lost or expired inventory, opportunity costs of tying up capital). Therefore, the best answer is E, which matches the description of the EOQ model.

The EOQ Model Is a Mathematical Tool For