ECONOMICS

Detailed explanation-1: -In inventory management, economic order quantity (EOQ) is the order quantity that minimises the order quantity, ordering cost, number of orders, total annual cost, carrying cost, order size and average inventory. The purpose of this model is to decide order quantity and reorder point.

Detailed explanation-2: -Generally, economic order quantity is the point at which inventory carrying costs are equal to order costs.

Detailed explanation-3: -By definition, Economic Order Quantity is a formula used to calculate inventory stocking levels. Its main purpose is to help a company maintain a consistent inventory level and to reduce costs. EOQ uses variable annual usage amount, order cost and warehouse carrying cost.