What Is the Objective of the Economic Order Quantity (EOQ)model

question 22

Multiple Choice

What is the objective of the economic order quantity (EOQ) model for inventory?

• A)To minimize order costs or carrying costs,whichever are higher
• B)To minimize order costs or carrying costs and maximize the rate of inventory turnover
• C)To minimize the total order costs and carrying costs over a period of time
• D)To order sufficient quantity to economically meet the next period's demand

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Definitions:

Units

Basic measures or quantities of product or service in business, used in accounting and production.

Least-Squares Regression Method

Least-Squares Regression Method is a statistical technique used to determine the line of best fit by minimizing the sum of the squares of the differences between the observed and predicted values.

Cost Behavior

The study of how specific costs respond to changes in the level of business activity, categorized into fixed, variable, and mixed costs.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.