The correct answer is: B. Technique of inventory control.
Economic order quantity (EOQ) is a model for determining the optimal quantity of goods to order at a time. The model takes into account the costs of ordering and carrying inventory, and aims to minimize the total cost.
The EOQ model is based on the following assumptions:
- Demand is constant.
- Lead time is constant.
- The cost of ordering is independent of the quantity ordered.
- The cost of carrying inventory is proportional to the average inventory level.
- The price of the item is constant.
The EOQ model can be used to determine the optimal order quantity for a variety of goods, including raw materials, finished goods, and spare parts.
The EOQ model is a useful tool for inventory management, but it is important to note that it is based on a number of assumptions. If these assumptions are not met, the EOQ model may not provide accurate results.
Here is a brief explanation of each option:
- A. Technique of warehousing of inventory. This is not the correct answer because the EOQ model is not concerned with the technique of warehousing of inventory. The EOQ model is concerned with the optimal quantity of goods to order at a time, not with the storage of those goods.
- B. Technique of inventory control. This is the correct answer because the EOQ model is a technique of inventory control. The EOQ model aims to minimize the total cost of inventory, including the costs of ordering and carrying inventory.
- C. Technique of inventory consumption in production process. This is not the correct answer because the EOQ model is not concerned with the technique of inventory consumption in production process. The EOQ model is concerned with the optimal quantity of goods to order at a time, not with how those goods are consumed in the production process.
- D. Technique of control of wastage of inventory. This is not the correct answer because the EOQ model is not concerned with the technique of control of wastage of inventory. The EOQ model is concerned with the optimal quantity of goods to order at a time, not with how to prevent waste of inventory.