Which of the following describe(s)the Economic Order Quantity (EOQ)?
A)The quantity at which carrying and ordering costs are equal.
B)The quantity that minimizes total inventory cost (ordering plus carrying).
C)The quantity that eliminates stockouts.
D)Both a and b describe EOQ.
E)All of the above describe EOQ.

Question

Quizplus · Accepted Answer

EOQ is defined as the optimal quantity of inventory to be ordered that minimizes the total cost of inventory management, including both ordering and carrying costs. Therefore, both option A and B are correct. Option C is incorrect, as EOQ does not eliminate stockouts but instead determines the optimal balance between ordering and carrying costs.

Which of the Following Describe(s)the Economic Order Quantity (EOQ)