If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand Q? = $2⋅D⋅SH\sqrt { \frac { 2 \cdot D \cdot S } { H } }$

A) is smaller than the holding cost per unit.
B) is zero.
C) is one-half of the economic order quantity.
D) is affected by the amount of product cost.
E) goes down if the holding cost per unit goes down.

Question

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand Q? =

2⋅D⋅SH\sqrt { \frac { 2 \cdot D \cdot S } { H } }

A) is smaller than the holding cost per unit.
B) is zero.
C) is one-half of the economic order quantity.
D) is affected by the amount of product cost.
E) goes down if the holding cost per unit goes down.

Alberto Quesada · Accepted Answer

Final Answer : C, Explanation :  The average amount of inventory on hand when ordering the Economic Order Quantity (EOQ) is one-half of the EOQ itself, as inventory levels rise to the EOQ before dropping to zero, averaging out at half the EOQ over time.

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