Answer:
The optimal order quantity on a total inventory cost curve is found at the lowest point between steps, where the ordering and holding costs are balanced, not on plateaus, slopes, or peaks.
Step-by-step explanation:
The question is concerned with finding the optimal order quantity based on a total inventory cost curve. This type of curve typically takes on a step-wise shape because inventory costs include both the ordering costs, which decrease with larger order quantities due to spreading the fixed costs over more units, and holding costs, which increase with larger order quantities due to the costs of storing the inventory. The optimal order quantity, also known as the Economic Order Quantity (EOQ), minimizes the total cost and is found where these two types of costs are balanced.
The correct answer to the provided question is that the optimal order quantity lies on neither the plateaus, ascending slopes, descending slopes, nor the peaks. Instead, it is found at the lowest point between steps, as this represents the point where the total inventory costs are minimized. This lowest point is where the curve moves from being dominated by ordering costs to being dominated by holding costs, demonstrating the trade-off between the two.