Question

At the economic ordering quantity (EOQ) level, the
following is true:
A) The ordering cost is minimum
B) The carrying cost is minimum
C) The ordering cost is equal to the carrying cost
D) The purchase price is minimum​

Answer 1

Answer:

The EOQ formula is the square root of (2 x 1,000 pairs x $2 order cost) / ($5 holding cost) or 28.3 with rounding. The ideal order size to minimize costs and meet customer demand is slightly more than 28 pairs of jeans. A more complex portion of the EOQ formula provides the reorder point

Answer 2

Answer:

C) The ordering cost is equal to the carrying cost.

At the economic ordering quantity ( EOQ) level, the ordering cost is equal to carrying cost.

Explanation:

In this model, ordering costs and carrying costs are kept at an optimum level, wherein stock can be maintained in order to save the overall the cost per unit.

EOQ is calculated by the following formula:

EOQ = $\sqrt{2( D) (O)/H$

Where

• (D)= Annual demand (Units)
• (O)= Cost per order
• (H) = holding cost per order