Economic order quantity helps determine which aspect of ordering?

Economic order quantity helps determine which aspect of ordering?

• A. Inventory diversity
• B. Order size and frequency
• C. Supplier reliability
• D. Quality of goods

Answer: (B)

Economic order quantity (EOQ) is a fundamental inventory management technique that focuses specifically on determining the optimal order size that minimizes the total costs associated with inventory. This includes both ordering costs (costs incurred every time an order is placed) and holding costs (costs associated with storing inventory). By calculating the EOQ, businesses can identify the most cost-effective quantity to order, which in turn helps to establish the frequency of orders necessary to maintain sufficient inventory levels without overstocking. Therefore, the correct answer emphasizes how EOQ directly addresses the considerations of quantity and the timing of inventory replenishment, ultimately optimizing inventory management practices. In this context, while diversity of inventory, supplier reliability, and quality of goods play important roles in supply chain management, they do not pertain specifically to the calculations made using the EOQ formula.

Economic order quantity (EOQ) is a fundamental inventory management technique that focuses specifically on determining the optimal order size that minimizes the total costs associated with inventory. This includes both ordering costs (costs incurred every time an order is placed) and holding costs (costs associated with storing inventory).

By calculating the EOQ, businesses can identify the most cost-effective quantity to order, which in turn helps to establish the frequency of orders necessary to maintain sufficient inventory levels without overstocking. Therefore, the correct answer emphasizes how EOQ directly addresses the considerations of quantity and the timing of inventory replenishment, ultimately optimizing inventory management practices.

In this context, while diversity of inventory, supplier reliability, and quality of goods play important roles in supply chain management, they do not pertain specifically to the calculations made using the EOQ formula.