The economic order quantity method of inventory management identifies the optimal inventory level by:

A) Subdividing the inventory into three categories based on item cost.
B) Computing the cost of the inventory sold on an average day.
C) Determining exactly the amount of inventory needed on a given day.
D) Equating the cost of inventory with the monthly average cost of goods sold.
E) Equating inventory restocking costs with the costs of carrying inventory.

Economic Order Quantity

A formula used in inventory management for determining the optimal order size that minimizes the total costs of holding and ordering inventory.

Inventory Management

The process of ordering, storing, and using a company's inventory, including raw materials, components, and finished products.

Inventory Levels

The quantity of goods and materials on hand at a particular time within a business, reflecting how well stock is being managed in relation to sales or production demand.