The objective of the Economic Order Quantity model is to reduce total inventory costs by minimizing carrying costs and ordering costs.

Question

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The Economic Order Quantity model aims to find the optimal quantity of inventory to order that will minimize both carrying costs (costs of holding inventory such as storage, insurance, and depreciation) and ordering costs (costs of placing an order such as administrative and transportation costs). By minimizing these costs, the total inventory costs can be reduced.

The Objective of the Economic Order Quantity Model Is to Reduce