Question

________ determines the point at which the sum of carrying costs and ordering costs are minimized, or the point at which carrying costs equal ordering costs. Group of answer choices Reorder point Economic Order Quantity When to order Inventory turnover

Answer 1

Answer:

Economic Order Quantity

Explanation:

The economic order quantity is the quantity at which the ordering cost and the carrying cost is minimized and equivalent to each other. It is the quantity that should be purchased by the company so that the cost of ordering and the holding cost could be less

The formula to compute it is shown below:

$= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

Hence, the correct option is b i.e. economic order quantity