What inventory factor may be omitted from the basic EOQ derivation because it is a constant?
A)Annual order-processing cost
B)Annual purchase cost of goods
C)Annual capital cost
D)Annual setup costs
E)all of these

Question

Quizplus · Accepted Answer

The annual purchase cost of goods is a constant since it remains unchanged despite the number of orders placed. Therefore, it may be omitted from the basic EOQ derivation. However, annual order-processing cost, annual capital cost, and annual setup costs are all variable factors that should be included in the EOQ calculation.

What Inventory Factor May Be Omitted from the Basic EOQ