At the economic order quantity:
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
B) total annual inventory costs and holding costs are minimized.
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
E) total annual inventory costs are minimized, and ordering costs exceed holding costs.

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) model is designed to minimize the total annual inventory costs, which includes both holding costs and ordering costs. At the EOQ point, holding costs equal ordering costs, which leads to the minimization of the total costs.

At the Economic Order Quantity