If the EOQ is ordered, which of the following is true?
A) Annual ordering cost exceeds annual holding cost.
B) Annual holding cost exceeds annual ordering cost.
C) Annual ordering cost is equal to annual holding cost.
D) The sum of annual ordering cost plus annual holding cost is maximized.
E) The annual holding cost curve is decreasing.

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) model is designed to minimize the total inventory costs, which include both ordering costs and holding costs. At the EOQ point, the annual ordering cost is equal to the annual holding cost, which is why option C is correct.

If the EOQ Is Ordered, Which of the Following Is