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The EOQ determines the inventory level at which the marginal cost of ordering equals the marginal revenue generated from additional sales.
The EOQ minimises the total relevant inventory costs, which consist of ordering and holding costs.
The EOQ model assumesconstant demand and constant lead time throughout the period.
The EOQ model assumes
constant demand and constant lead time throughout the period.
At the EOQ, the total annual ordering cost is equal to the total annualholding cost.
At the EOQ, the total annual ordering cost is equal to the total annual
holding cost.
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