EOQ is the order quantity that gives the lowest total of:

ordering cost and carrying cost per year

2078 Chaitra · 1 mark

Define economic order quantity

Short answer

EOQ is the order quantity that minimizes the sum of annual ordering and carrying costs. It is computed as sqrt(2DC_o/C_h), where D is annual demand, C_o ordering cost per order, and C_h holding cost per unit per year.

Define EOQ (economic order quantity).

Economic Order Quantity (EOQ) is the quantity of material to be ordered each time that gives the lowest total of ordering cost and carrying (holding) cost per year. It is $EOQ=\sqrt{2DC_o/C_h}$ , where $D$ is annual demand, $C_o$ ordering cost per order and $C_h$ carrying cost per unit per year.

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