Question

The two most basic inventory questions answered by the typical inventory model are: A. order quantity and service level. B. order quantity and cost of orders. C. timing of orders and cost of orders. D. ordering cost and carrying cost. E. timing of orders and order quantity.

Answer 1

E. timing of orders and order quantity.

Step-by-step explanation:

Economic order quantity EOQ corresponds to the number of units that can be added to the inventory, and the order is placed in order to reduce the overall inventory expense. It keeps the cost of ordering and the cost of transporting in check. The reorder point is the amount of inventory that the company has on hand, and when it reaches this number, the company needs to reorder the item.

EOQ acts as a summary inventory method, constantly monitoring inventory levels and placing a set quantity order until the volume hits the reorder stage. As a result, EOQ assists in determining the reorder point and optimum reorder quantity to prevent product shortages.

Answer 2

Answer: E. timing of orders and order quantity.

Step-by-step explanation:

Inventory models try to do one thing, reduce the cost of inventory. Inventory can incur several costs such as storage costs and ordering costs just to name a few so companies would prefer if they could order a certain amount of inventory that can be sold off in time but that would leave a little quantity for emergencies.

This is why the two most important questions are the timing of the orders and the order quantity. The timing will determine if they can sell it off in time to customers and the quantity must be right such that enough is sold and the quantity left is enough for emergencies but not too much that holding costs will be high.