The primary purpose of the basic economic order quantity (EOQ) model is to:
A) Calculate the reorder point, so that replenishments take place at the proper time
B) Minimize the sum of purchase cost and holding cost
C) Maximize the customer service level
D) Calculate the optimum safety stock level
E) None of the above

Question

Quizplus · Accepted Answer

The primary purpose of the EOQ model is to minimize the sum of ordering costs and holding costs, not purchase costs and holding costs.

The Primary Purpose of the Basic Economic Order Quantity (EOQ)