ECONOMICS

Detailed explanation-1: -To determine the Economic Order Quantity, the relevant ordering costs are maximized and the relevant carrying costs are minimized. Answer: FALSE Explanation: We minimize both the relevant ordering costs and the relevant carrying costs. Diff: 2 Objective: 2 AACSB: Analytical thinking.

Detailed explanation-2: -Economic order quantity (EOQ) is the ideal quantity of units a company should purchase to meet demand while minimizing inventory costs such as holding costs, shortage costs, and order costs.

Detailed explanation-3: -Economic Order Quantity (EOQ) is that size of order which minimizes total annual costs of carrying and cost of ordering. It is evident from above that the minimum total costs occur at a point where the ordering costs and inventory carrying costs are equal.

Detailed explanation-4: -The EOQ formula helps calculate the optimal order quantity to save money on logistics and ecommerce warehousing costs.

Detailed explanation-5: -Ordering costs are costs that are incurred to obtain additional inventories, whereas carrying costs are the costs incurred to hold inventory on hand. The total inventory cost is the ordering cost plus the carrying cost.