The Economic Order Quantity Model

question 26

Multiple Choice

The economic order quantity model:

• A) determines ordering costs.
• B) determines total costs involved in holding inventory.
• C) is a mathematical tool for determining the order quantity that minimises the costs of ordering and holding inventory.
• D) is a mathematical tool for determining shortage and ordering costs.

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Definitions:

Overhead Volume Variance

A metric used to measure the difference between the budgeted and actual volume of production, affecting the budgeted overhead costs.