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) principle is a well-known inventory control method used to determine the most economical quantity of materials to order at one time.
It minimizes the total of ordering cost and carrying cost of inventory.
In batch production, the same principle is applied to decide the Economic Batch Quantity (EBQ) — which is the optimal size of a production batch to minimize setup and carrying costs.
So, EOQ is the base principle for calculating EBQ.
Hence, the inventory control principle used is Economic Order Quantity (EOQ).