What is economic order quantity?
A) Maximum order quantity
B) A result of balancing holding costs against order costs
C) A quantity that is determined by the minimum holding cost
D) The sum of the safety stock and lead time stock

Question

Quizplus · Accepted Answer

Economic Order Quantity (EOQ) is a formula that calculates the optimal quantity of inventory to order given a set of assumptions including holding costs, order costs, and demand. The EOQ formula balances holding costs, which increase as inventory levels increase, against order costs, which decrease as order quantities increase. Therefore, the correct answer is B, "a result of balancing holding costs against order costs."

What Is Economic Order Quantity