Question

Question 1:

Which of the following statements about the EOQ model are true? (select all that apply)

a. Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.
b. The EOQ is a company's optimal order quantity that minimizes its total costs related to ordering, receiving, and holding inventory.
c. The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time.
d. EOQ calculations are often applied in health care, retail, restaurant, and grocery stores in instances where demand remains relatively consistent over time. These calculations can drastically reduce the amount of money spent in inventory by minimizing holding, shortage, and ordering costs.

Answer 1

The EOQ model is used to determine the optimal order quantity that minimizes inventory costs. It is applied in situations where demand, ordering, and holding costs remain constant. EOQ calculations can reduce inventory costs in industries with consistent demand.

Step-by-step explanation:

The Economic Order Quantity (EOQ) model is a valuable tool for companies to determine the optimal order quantity that minimizes their inventory costs. The following statements about the EOQ model are true:

1. Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.
2. The EOQ is a company's optimal order quantity that minimizes its total costs related to ordering, receiving, and holding inventory.
3. The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time.

It is important to note that while the EOQ model can be applied to various industries, it is commonly used in sectors such as health care, retail, restaurant, and grocery stores where demand tends to remain relatively consistent over time, allowing for significant reductions in inventory costs through the calculation of EOQ.