Question

In the context of the EOQ model, the term "sawtooth" refers to which of the following?

a. How aggressively managers are able to cut inventory levels.
b. The pattern of inventory consumption and replenishment over time.
c. The particular item that can be managed using the EOQ approach.
d. The basic tool used to build storage facilities.

Answer 1

b. The pattern of inventory consumption and replenishment over time.

Step-by-step explanation:

• In the context of the E.O.Q model, the terms sawtooth refers to the patterns of the inventory consumption which is replenished over the time.

• The economic order quantity is the order quantity that minimizes the holding and the ordering cost and is one of the best classical production schedules models and applies only when a demand for a product is constant