The economic order quantity (EOQ)model of inventory management determines the optimal inventory level that:
A)minimizes shortage costs.
B)minimizes carrying costs.
C)a and b
D)none of the above describes the EOQ model.

Question

Quizplus · Accepted Answer

The EOQ model considers both shortage costs (costs associated with not having enough inventory to meet demand) and carrying costs (costs associated with holding and storing inventory). The model calculates the quantity of inventory that minimizes both types of costs, leading to an optimal inventory level.

The Economic Order Quantity (EOQ)model of Inventory Management Determines the Optimal