Question

In inventory control theory, the Economic Order Quantity

• A. Capacity of a warehouse
• B. Lot size corresponding to break-even analysis
• C. Optimum lot size
• D. Average level of inventory

Answer 1

Answer:

C. Optimum lot size

In inventory control theory, the Economic Order Quantity (EOQ) refers to the optimum lot size. It is the quantity that minimizes the total cost, including both ordering and holding costs. This concept is crucial for efficient inventory management as it helps in determining the most economical quantity to order, ensuring cost-effectiveness and optimal inventory levels.