Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost?
A) Benchmarking
B) Factoring
C) Pull-push strategy
D) Economic order quantity

Question

Quizplus · Accepted Answer

Economic order quantity (EOQ) is a statistical technique that calculates the optimal quantity of inventory a business should order to minimize total inventory cost. It takes into account the cost of holding inventory as well as the cost of ordering and is calculated using a formula that considers the annual demand for the product, ordering cost, and holding cost. Choice A, benchmarking, is a process of comparing a business's performance to that of industry leaders or best practices. Choice B, factoring, is a financial practice of selling accounts receivable to a third party at a discount. Choice C, pull-push strategy, is a supply chain management approach that balances demand and supply to minimize inventory levels.

Which of the Following Is a Statistical Technique That Determines