The primary objective of the Economic Order Quantity (EOQ) model is to minimize the total inventory costs, which include both order costs and carrying costs.
In more detail, the EOQ model calculates the optimal quantity of inventory to order that minimizes the total cost associated with ordering and storing inventory. This balance is crucial for businesses to maintain efficiency.
Order costs are the expenses incurred every time an order is placed, including shipping and handling fees, while carrying costs reflect the costs tied up in holding inventory, such as storage fees, insurance, and depreciation.
By finding the optimal order quantity, the EOQ model helps businesses manage their inventory more effectively, ensuring that they do not overstock (which increases carrying costs) or understock (which leads to higher order costs). Hence, the correct answer to the question is (b) to minimize order costs or carrying costs.