Which of the following costs does the EOQ minimise?

Which of the following costs does the EOQ minimise?
A . Total cost of safety stock
B . Total cost of ordering inventory
C . Total cost of annual inventory cost
D . Total cost of carrying stock

View Answer

Answer: C

Explanation:

Economic order quantity (EOQ) was developed in 1913 by Ford W. Harris and has been refined over time. The formula assumes that demand, ordering, and holding costs all remain constant. The EOQ minimizes the total annual inventory cost.

EOQ formula is as follow:

LO 2, AC 2.3