Question

Name the inventory control principle used to calculate economic batch quantity.

Hint:

EOQ helps balance ordering cost and holding cost — the same idea applies to EBQ.

Answer 1

The Economic Order Quantity (EOQ) model is a standard inventory management technique for determining the most cost-effective order size for materials.
Its objective is to reduce the combined expenses of ordering and holding inventory.
In batch manufacturing, this concept is adapted as the Economic Batch Quantity (EBQ), representing the ideal batch size to minimize setup and holding costs.
Consequently, EBQ calculation is founded on the EOQ principle.
Therefore, the inventory control methodology employed is Economic Order Quantity (EOQ).