LaTiffa Company orders 250 units at a time and places 15 orders per year. Total ordering cost is $1,100, and total carrying cost is $1,100. Which statement best describes the economic order quantity?
A) The economic order quantity (EOQ) is 15.
B) The economic order quantity (EOQ) is 250.
C) The economic order quantity (EOQ) is less than 250.
D) The economic order quantity (EOQ) is more than 250.

Question

Quizplus · Accepted Answer

The economic order quantity (EOQ) is the order quantity that minimizes the total cost of inventory, which includes both ordering and carrying costs. Since the total ordering cost equals the total carrying cost at the current order quantity of 250 units, this indicates that 250 is the EOQ.

LaTiffa Company Orders 250 Units at a Time and Places