The economic order quantity for a product is 500 units.However, new orders require five working-days lead time during which time 60 units will be used.Given this information, the correct economic order quantity is:

Question

Quizplus · Accepted Answer

The economic order quantity (EOQ) formula calculates the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. The lead time and usage rate do not affect the EOQ calculation itself; they are more relevant for determining reorder points. Therefore, the EOQ remains 500 units despite the lead time and usage rate information provided.

The Economic Order Quantity for a Product Is 500 Units