In an EOQ model the optimal order quantity occurs where
A)the slope of the total cost curve equals zero
B)ordering cost equals carrying cost
C)the differential of the total cost curve with respect to the order size equals zero
D)all of the above

Question

Quizplus · Accepted Answer

All three options are correct and necessary conditions for determining the optimal order quantity in an EOQ model. The optimal order quantity occurs where the total cost curve is at its lowest point, which is where the slope of the total cost curve equals zero and the differential of the total cost curve with respect to the order size equals zero. This is also the point where ordering cost equals carrying cost. Therefore, all three options are necessary and sufficient conditions for determining the optimal order quantity.

In an EOQ Model the Optimal Order Quantity Occurs Where