At the Economic Order Quantity:

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) is the point where the total annual cost of inventory is at its minimum. This means that the annual ordering cost and the annual holding cost for an item are equal at the EOQ. Therefore, choice B is the correct answer. Choice A is incorrect because if the ordering cost is greater than the holding cost, then it would be beneficial to order larger quantities to reduce the number of orders and thus the ordering cost. Choice C is incorrect because if the holding cost is greater than the ordering cost, it would be beneficial to reduce the order quantity and therefore the holding cost.