In the basic EOQ model,the optimal inventory level is the point at which
A) total cost is minimized.
B) total revenue is maximized.
C) carrying costs are minimized.
D) ordering costs are minimized.

Question

Quizplus · Accepted Answer

The EOQ (Economic Order Quantity) model is designed to find the optimal inventory level that minimizes total inventory costs, which includes both carrying costs and ordering costs. The objective of the EOQ model is to balance the cost of carrying inventory against the cost of ordering inventory. At the optimal inventory level, the total cost (carrying cost + ordering cost) is minimized. Therefore, the answer is A) total cost is minimized.

In the Basic EOQ Model,the Optimal Inventory Level Is the Point