Management Notes

Reference Notes for Management

What is the primary purpose of the basic economic order quantity model shown below?

What is the primary purpose of the basic economic order quantity model shown below?

What is the primary purpose of the basic economic order quantity model shown below?

 Options:

A. to calculate the reorder point, so that replenishments take place at the proper time
B. to minimize the sum of carrying cost and holding cost
C. to maximize the customer service level
D. to minimize the sum of setup cost and holding cost
E. to calculate the optimum safety stock

The Correct Answer Is:

D. to minimize the sum of setup cost and holding cost

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