The economic ordering parameter that minimizes the total combined costs of inventory ordering and inventory holding is known as:

Explanation

• Economic Order Quantity (EOQ) is the optimal order size that minimizes total annual inventory holding costs and ordering costs.
• The mathematical formula is $EOQ = sqrt{frac{2DS}{H}}$, where $D$ = Annual Demand, $S$ = Ordering Cost per order, and $H$ = Holding Cost per unit per year.
• At the EOQ point, total annual ordering costs exactly equal total annual inventory holding costs.