Supply Chain Management Professional (SCMP) · Question
What is 'economic order quantity' (EOQ) primarily used to determine?
EOQ is a formula used to calculate the ideal order quantity that minimizes the total cost of ordering and holding inventory.
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Question: What is 'economic order quantity' (EOQ) primarily used to determine?
Answer options:
- The optimal price to pay for an item.
- The most efficient transportation route. ✅ The ideal order size to minimize total inventory costs.
- The maximum inventory level to avoid obsolescence.
Correct answer: The ideal order size to minimize total inventory costs.
Explanation: EOQ is a formula used to calculate the ideal order quantity that minimizes the total cost of ordering and holding inventory.
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