What costs do the ordering costs become when the economic order quantity (EOQ)model is applied to units produced within the company?
A)setup costs
B)stockout costs
C)carrying costs
D)safety-stock costs

Question

Quizplus · Accepted Answer

Ordering costs refer to the expenses incurred when placing an order, such as the cost of processing paperwork or setting up equipment. When the economic order quantity (EOQ) model is applied to units produced within the company, ordering costs usually take the form of setup costs, which are the costs associated with preparing machinery or equipment to begin production. The other options, stockout costs, carrying costs, and safety-stock costs, are all related to inventory management but are not directly connected to the EOQ model for units produced within the company.

What Costs Do the Ordering Costs Become When the Economic