Question

Significance of eoq model with the help of cost curve

Answer 1

EOQ model is a commonly used inventory model which provides an optimal order quantity for an organization by minimizing the inventory costs.

This model mainly assists in attaining the optimal order quantity by reducing the total inventory cost incurred by an organization per year.

The EOQ model is based on various assumptions that demand, cost of production and other variables are always known and constant.

This model is employed by large manufacturing and other business organizations to determine the level of production and the optimal quantity of inventory to be ordered to meet the demand