[amp_mcq option1=”Economic Order Quantity” option2=”Essential Order Quantity” option3=”Economic Output Quantity” option4=”Essential Output Quantity” correct=”option1″]
The correct answer is: A. Economic Order Quantity.
EOQ stands for Economic Order Quantity. It is the optimal quantity of goods to order at a time in order to minimize the total costs associated with ordering and carrying inventory.
The EOQ is calculated by taking into account the following factors:
- The cost of ordering goods
- The cost of carrying inventory
- The demand for the goods
- The lead time for the goods
The EOQ can be calculated using the following formula:
EOQ = รขยย(2DC/h)
where:
- D = the demand for the goods in units per year
- C = the cost of ordering goods per order
- h = the holding cost per unit per year
The EOQ is a useful tool for businesses to minimize their inventory costs. By ordering the optimal quantity of goods at a time, businesses can save money on ordering costs and carrying costs.
The following are the other options and their explanations:
- Option B: Essential Order Quantity. This is not a standard term in inventory management.
- Option C: Economic Output Quantity. This is not a standard term in inventory management.
- Option D: Essential Output Quantity. This is not a standard term in inventory management.