What inventory factor may be omitted from the basic EOQ derivation because it is a constant?
A) Annual order-processing cost
B) Annual purchase cost of goods
C) Annual capital cost
D) Annual setup costs
E) Annual total costs

Question

Quizplus · Accepted Answer

The annual purchase cost of goods is typically omitted from the basic EOQ derivation because it remains constant regardless of the order quantity. EOQ focuses on minimizing the sum of ordering and holding costs, not the purchase cost.

What Inventory Factor May Be Omitted from the Basic EOQ