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 best describes the economic order quantity?
A)The economic order quantity (EOQ) is 250.
B)The economic order quantity (EOQ) is more than 250.
C)The economic order quantity (EOQ) is less than 250.
D)The economic order quantity (EOQ) is 15.

Question

Quizplus · Accepted Answer

The economic order quantity (EOQ) is the order size that minimizes the sum of ordering and carrying costs. Given that LaTiffa Company orders 250 units at a time, places 15 orders per year, and both the total ordering cost and total carrying cost are $1,100, it indicates that the current order size of 250 units is already optimized to minimize costs, making it the EOQ.

LaTiffa Company Orders 250 Units at a Time and Places