For the inventory model with planned shortages,the optimal order quantity results in
A)annual holding cost = annual ordering cost.
B)annual holding cost = annual backordering cost.
C)annual ordering cost = annual holding cost + annual backordering cost.
D)annual ordering cost = annual holding cost − annual backordering cost.

Question

Quizplus · Accepted Answer

In the inventory model with planned shortages, the optimal order quantity is determined when the annual ordering cost equals the sum of the annual holding cost and the annual backordering cost. This balance minimizes the total cost associated with ordering, holding, and backordering inventory.

For the Inventory Model with Planned Shortages,the Optimal Order Quantity