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In inventory theory, the Economic Order Quantity is-
Question

In inventory theory, the Economic Order Quantity is-

A.

Capacity of a warehouse

B.

Lot size corresponding to break-even analysis

C.

Optimum lot size

D.

Average level of inventory

Correct option is C


The Economic Order Quantity (EOQ) is the order quantity that minimizes the total cost of inventory management, which includes ordering costs and holding costs. It is the optimum lot size to order to reduce inventory costs while satisfying demand.
The EOQ formula is:

Where:
· D: Demand,
· S: Ordering cost per order,
· H: Holding cost per unit.

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