Answer (D) is correct . The EOQ model is a deterministic model that calculates the ideal order (or production lot) quantity given specified demand, ordering or setup costs, and carrying costs. The model minimizes the sum of inventory carrying costs and either ordering or production setup costs.
Answer (A) is incorrect because The annual quantity of inventory demanded is an input into the formula, not the result.
Answer (B) is incorrect because Annual usage is a determinant of annual demand, which is an input into the formula.
Answer (C) is incorrect because Safety stock is not reflected in the basic EOQ formula.
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