Asked by Abhishek Prodduturi on Jun 30, 2024
Verified
Which of the following statements is/are correct?
i. The economic order quantity determines the optimum order size for individual inventory items.
ii. The economic order quantity cannot be used in a manufacturing organisation.
iii. The economic order quantity minimises the sum of the ordering and carrying costs.
A) i
B) ii
C) i and iii
D) All of the given answers
Economic Order Quantity
The optimal quantity of inventory to order that minimizes total inventory costs, including holding and ordering costs.
Optimum Order
The most efficient quantity of an item to order, minimizing costs and meeting demand.
Ordering Costs
Expenses related to ordering and receiving materials, including costs for placing orders, shipping, and handling.
- Assess and interpret the significance of Economic Order Quantity (EOQ) within inventory management contexts.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
C
Explanation :
i. The economic order quantity is a formula used to determine the optimum order size for individual inventory items, taking into account the cost of ordering and holding inventory.
ii. The economic order quantity can be used in both manufacturing and non-manufacturing organizations.
iii. The economic order quantity minimizes the total cost of inventory by balancing the costs of ordering and holding inventory. Hence, option (i) and (iii) are correct.
ii. The economic order quantity can be used in both manufacturing and non-manufacturing organizations.
iii. The economic order quantity minimizes the total cost of inventory by balancing the costs of ordering and holding inventory. Hence, option (i) and (iii) are correct.
Learning Objectives
- Assess and interpret the significance of Economic Order Quantity (EOQ) within inventory management contexts.