{"id":53094,"date":"2024-04-15T23:48:59","date_gmt":"2024-04-15T23:48:59","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=53094"},"modified":"2024-04-15T23:48:59","modified_gmt":"2024-04-15T23:48:59","slug":"decision-model-to-calculate-optimal-quantity-of-inventory-to-be-ordered-is-called","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/decision-model-to-calculate-optimal-quantity-of-inventory-to-be-ordered-is-called\/","title":{"rendered":"Decision model to calculate optimal quantity of inventory to be ordered is called"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;efficient order quantity&#8221; option2=&#8221;economic order quantity&#8221; option3=&#8221;rational order quantity&#8221; option4=&#8221;optimized order quantity&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is: A. efficient order quantity.<\/p>\n<p>The efficient order quantity (EOQ) is a decision model for determining the optimal quantity of inventory to order. It is based on the following assumptions:<\/p>\n<ul>\n<li>Demand is constant.<\/li>\n<li>Lead time is constant.<\/li>\n<li>The cost of ordering is independent of the order quantity.<\/li>\n<li>The cost of carrying inventory is proportional to the average inventory level.<\/li>\n<li>The cost of goods sold is constant.<\/li>\n<\/ul>\n<p>The EOQ model minimizes the total cost of ordering and carrying inventory. The formula for calculating the EOQ is:<\/p>\n<p>$EOQ = \\sqrt{\\frac{2DC}{h}}$<\/p>\n<p>where:<\/p>\n<ul>\n<li>D = annual demand<\/li>\n<li>C = cost of placing an order<\/li>\n<li>h = holding cost per unit per year<\/li>\n<\/ul>\n<p>The EOQ model can be used to determine the optimal order quantity for a variety of products. It is a simple and effective way to manage inventory costs.<\/p>\n<p>Option B, economic order quantity, is a synonym for EOQ. Option C, rational order quantity, is not a commonly used term. Option D, optimized order quantity, is a more general term that could refer to any method of determining the optimal order quantity.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;efficient order quantity&#8221; option2=&#8221;economic order quantity&#8221; option3=&#8221;rational order quantity&#8221; option4=&#8221;optimized order quantity&#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-53094","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Decision model to calculate optimal quantity of inventory to be ordered is called<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/decision-model-to-calculate-optimal-quantity-of-inventory-to-be-ordered-is-called\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Decision model to calculate optimal quantity of inventory to be ordered is called\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;efficient order quantity&#8221; 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