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.
E)minimize stock on hand.

Question

Quizplus · Accepted Answer

The basic EOQ model aims to find the optimal order quantity that minimizes the total cost of inventory, which is the sum of carrying costs and ordering costs. While minimizing carrying costs or ordering costs alone may reduce overall inventory costs, the EOQ model seeks to find a balance between them that achieves the lowest total cost. Customer satisfaction and stock on hand are important factors to consider, but they are not the primary focus of the EOQ model.

In Making Inventory Decisions,the Purpose of the Basic EOQ Model