in industry . Hence each items is defined by correct specifications such as length , wt ,density , thickness , power , capactites ,so on The process of Standardisation can help in simplyfing procurement process and varietyreduction . It would result in reducing unnecessary varieties and stadardising into mosteconomical size , grades , shapes ,colors , types etc. Thus Stadardisation helps in reducing inventory , better communication to vendors andusers .
●EOQ - Economic Order Quantity
Conventional order system relied on annual and monthly consumption pattern henceincreasing inventory level in stores , more large companies and organisation now have putsome sort of mathematical equation in there materials module purchase system where in onecannot order than more the economic order quantity .Its mathematical value arrived with anequation where values for cost of ordering , carrying cost, annual total demand and unitprice is taken into account to arrive at EOQ .
Some of the definitions of EOQ
EOQ is a mathematical formula designed to minimize the combination of annual holding costsand ordering costs. There is a lot of hype about just in time inventory systems (JIT), whichachieve smaller inventories through very frequent orders, but frequent ordering can oftenresult in an over-spending on ordering costs. Even though companies often miscalculatetheir ordering costs, which makes frequent ordering seem costly, EOQ is an important tool for determining what inventory should be.sourcewww.industrysource.com EOQ stands for Economic Order Quantity. EOQ is basically a level of inventory which will