ECONOMICS

Detailed explanation-1: -Economic Order Quantity (EOQ) determines the best inventory level for a company to maintain. It maximizes the inventory to meet customer’s demands and lower the inventory costs associated with it.

Detailed explanation-2: -Its objective is to determine the optimal (i.e., lowest cost) production or purchase order quantity based on the tradeoff between setup and holding costs. The EOQ is based on the total production costs for a single item for a period of time such as one year.

Detailed explanation-3: -The economic order quantity increases with higher demand and higher carrying costs and decreases with higher ordering costs.

Detailed explanation-4: -Explanation: Economic order quantity (EOQ): Economic order quantity is the size of the order which helps in minimizing the total annual cost of inventory in the organization.

Detailed explanation-5: -The EOQ is an important tool to help companies reduce costs and maximize profits by controlling inventory levels and delivery timing. By optimizing the order quantity and delivery frequency, companies can save on ordering costs, warehouse costs, and lost sales due to stockouts.