MANAGEMENT

Detailed explanation-1: -The economic order quantity (EOQ) model determines the optimal order size that minimizes total annual inventory costs. True. For a given annual demand, total annual ordering cost is independent of order size. The EOQ model determines the optimal order size that minimizes the sum of carrying costs and shortage costs.

Detailed explanation-2: -Economic Order Quantity (EOQ), also known as Economic Buying Quantity (EPQ), is the order quantity that minimizes the total holding costs and ordering costs in inventory management. It is one of the oldest classical production scheduling models.

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: -Also referred to as ‘optimum lot size, ’ the economic order quantity, or EOQ, is a calculation designed to find the optimal order quantity for businesses to minimize logistics costs, warehousing space, stockouts, and overstock costs. The formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.