The expression Q* refers to the
A)maximum inventory on hand.
B)optimal inventory for a stated period.
C)optimal order quantity.
D)None of these are correct.

Question

Quizplus · Accepted Answer

Q* refers to the optimal order quantity, which is the order quantity that minimizes total inventory costs (holding and ordering costs) for a specific item. It is calculated using the Economic Order Quantity (EOQ) formula. Therefore, option C is the correct choice. A refers to the maximum inventory on hand, which is the level of inventory above which an organization should not hold inventory. B is incorrect because optimal inventory for a stated period is the amount of inventory that matches the inventory requirements for a given period, satisfying service level requirements. D is incorrect because Q* is a valid answer.

The Expression Q* Refers to the