Use of the economic order quantity
A) determines the reorder point.
B) provides the lowest overall inventory costs.
C) determines the safety stock.
D) All of the options are true.

Question

Quizplus · Accepted Answer

The economic order quantity calculation provides the lowest overall inventory costs by determining the optimal order quantity that balances inventory carrying costs and ordering costs. It does not directly determine the reorder point or safety stock, although these parameters can be considered when setting inventory policies based on the EOQ calculation.

Use of the Economic Order Quantity