In making inventory decisions, the purpose of the basic EOQ model is to
A)minimize carrying costs.
B)minimize ordering costs.
C)minimize the sum of carrying costs and ordering costs.
D)minimize customer dissatisfaction.

Question

Quizplus · Accepted Answer

The basic EOQ model aims to find the optimal order quantity that minimizes the sum of carrying costs (costs associated with holding inventory) and ordering costs (costs associated with placing an order). While minimizing carrying or ordering costs alone may be beneficial, the ultimate goal is to minimize the total costs associated with inventory management. Minimizing customer dissatisfaction is also a desirable outcome, but it is not the specific purpose of the EOQ model.

In Making Inventory Decisions, the Purpose of the Basic EOQ