Economic Order Quantity
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ECONOMICS
Inventory Management
Economic Order Quantity
Economic Order Quantity balances ordering and holding costs to optimize inventory management
28 Jan 2026
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Which of the following best explains why Economic Order Quantity minimizes total inventory costs?
Because it maximizes the amount of inventory to avoid stockouts at all costs.
Because it minimizes ordering costs by ordering as infrequently as possible regardless of holding costs.
Because it balances ordering costs and holding costs to find the most cost-effective order size.
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