What does "minimum order quantity" (MOQ) signify?

The minimum order quantity (MOQ) signifies the smallest quantity a supplier is willing to sell to a customer. This concept is crucial in supply chain management because it helps suppliers manage their inventory and production costs. When a supplier sets an MOQ, they ensure that each order is large enough to justify the expense involved in fulfilling it, which may include manufacturing, shipping, and administrative costs. As a result, the MOQ often serves as a threshold for customers to meet when placing an order, ensuring that the transaction is economically viable for the supplier.

In contrast to the correct choice, the other options do not accurately reflect the definition of MOQ. One option refers to a supplier's maximum stocking limit, while another discusses typical customer purchasing behavior. Another option states that it relates to a limit on online ordering, which is not pertinent to the specific definition of minimum order quantity. Understanding MOQ is essential for effective purchasing strategies and supply chain operations.