The EOQ Model Is Designed to Determine How Much

question 29

Multiple Choice

The EOQ model is designed to determine how much:

• A)total inventory a firm needs in any one year.
• B)total inventory costs will be for any one given year.
• C)inventory should be purchased at a time.
• D)inventory will be sold per day.
• E)a firm loses in sales per day when an inventory item is depleted.

---

Definitions:

Perpetual Inventory System

An accounting method that records inventory purchases and sales in real-time, providing a constant update of inventory levels.

FOB Shipping Point

is a term used in shipping, where the buyer becomes responsible for goods once they are shipped, and must pay for the transport costs.

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under previous transactions, often due to a return or refund.

Perpetual Inventory System

A technique in inventory management accounting that captures sales or purchases right away using computerized systems for point-of-sale and software for enterprise asset management.