Under the Economic Order Quantity (EOQ) model, total inventory costs are minimized when holding costs equal:

Explanation

Core Concept: EOQ pinpoints the order quantity that minimizes the sum of annual ordering costs and holding (carrying) costs. At EOQ, Annual Holding Cost = Annual Ordering Cost. Context/Distractors: EOQ model assumes constant demand, zero lead time variability, and no stockouts. Exam Tip/Key Fact: EOQ Formula = SQRT((2 * Annual Demand * Order Cost) / Holding Cost per unit).