IGNOU BRL 115 2026 - Economic Order Quantity (EOQ).

Question

Economic Order Quantity (EOQ).

17 Feb 2026

Answer :

Word Count : 219

Economic Order Quantity (EOQ) is a key inventory management concept used to determine the optimal order size that minimizes total inventory costs. These costs include ordering costs (such as transportation, order processing, and receiving costs) and holding costs (such as storage, insurance, and depreciation). By calculating the EOQ, businesses can reduce excess stock while avoiding stockouts, thus optimizing the supply chain. EOQ is determined through a formula: EOQ = √(2DS/H) Where: * D is the demand for the product (units per period) * S is the ordering cost

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