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Which of the following items would most likely to be included in the calculation of economic order quantity?

I] Price II] Cost III] Demand IV] Supply

Accounting Auditing Cost Accounting Bank Accounting managerial accounting
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Question added by Mohammad Ali , Accounts Officer ( Contract) , Bharat Pumps & Compressors Ltd Naini Allahabad
Date Posted: 2014/12/27
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Monica Mmboga

The correct answer is price

Syed Ali Hasan
by Syed Ali Hasan , Finance Executive , People Perfect Advisory

The EOQ aims for the optimum order size while assuming that:

  • Demand is relatively uniform and certain
  • Item costs are fixed
  • Ordering costs and inventory costs are fixed
  • Lead times are constant

With the above stated assumptions, the formula only has to account for Demand, Inventory costs and Ordering costs in the formula. That's a simplified scenario this formula uses but it still comes in handy.

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