When using the Economic Order Quantity model, what primarily influences the order quantity?

The Economic Order Quantity (EOQ) model is a fundamental principle in inventory management that seeks to determine the optimal order quantity that minimizes total inventory costs. The primary factors influencing this order quantity are holding costs and order costs.

Holding costs are the expenses incurred while storing inventory, including warehousing costs, insurance, and depreciation. Conversely, order costs pertain to the expenses associated with placing and receiving an order, such as shipping fees and order processing expenses. The EOQ model balances these two types of costs. When the order quantity is too small, the frequency of orders increases, raising order costs but lowering holding costs. Conversely, a larger order quantity reduces the number of orders but increases holding costs. By finding the point where these costs are minimized, the EOQ provides businesses with an efficient strategy to manage inventory without over-committing resources.

The other options may influence operational practices and strategies but do not directly affect the mathematical calculation in the EOQ formula, which focuses specifically on the interplay between holding costs and order costs.