The Primary Purpose of the Basic Economic Order Quantity (EOQ)

question 38

Multiple Choice

The primary purpose of the basic economic order quantity (EOQ) model is to:

• A) Calculate the reorder point, so that replenishments take place at the proper time
• B) Minimize the sum of purchase cost and holding cost
• C) Maximize the customer service level
• D) Calculate the optimum safety stock level
• E) None of the above

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Definitions:

Saturation

A state or process in which a quantity has reached its maximum capacity or a point beyond which no additional absorption or reaction can occur.

Sensory Adaptation

A process whereby sensory receptors grow less responsive to stimuli that do not vary with time.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time.

Sensory Overload

A condition where one or more of the body’s senses experiences over-stimulation from the environment.