Inventory Management using EOQ

Holding Cost

0.3

Order Cost

160

Unit Cost

61

Demand

250

Order Quantity Holding Cost

Q
hC(Q/2)
4.41
$40.33
8.82
$80.66
13.22
$121.00
17.63
$161.33
22.04
$201.66
26.45
$241.99
30.86
$282.32
35.26
$322.66
39.67
$362.99
44.08
$403.32
48.49
$443.65
52.89
$483.98
57.30
$524.32
61.71
$564.65
66.12
$604.98
70.53
$645.31
74.93
$685.64
79.34
$725.98
83.75
$766.31
88.16
$806.64
92.57
$846.97
96.97
$887.30
101.38
$927.63
105.79
$967.97
110.20
$1,008.30
114.60
$1,048.63
119.01
$1,088.96
123.42
$1,129.29
127.83
$1,169.63
132.24
$1,209.96

Q
22

Line
0

EOQ
66.12

Order Cost
(R/Q)S
$9,074.69
$4,537.35
$3,024.90
$2,268.67
$1,814.94
$1,512.45
$1,296.38
$1,134.34
$1,008.30
$907.47
$824.97
$756.22
$698.05
$648.19
$604.98
$567.17
$533.81
$504.15
$477.62
$453.73
$432.13
$412.49
$394.55
$378.11
$362.99
$349.03
$336.10
$324.10
$312.92
$302.49

Total Cost
$16,459.96

Material Cost
CR
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00
$15,250.00

Shortage Cost
(B(Q-n)^2)/2Q
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

Total Cost
TC
$24,365.02
$19,868.01
$18,395.89
$17,680.00
$17,266.60
$17,004.44
$16,828.71
$16,706.99
$16,621.29
$16,560.79
$16,518.62
$16,490.21
$16,472.37
$16,462.84
$16,459.96
$16,462.48
$16,469.45
$16,480.12
$16,493.92
$16,510.37
$16,529.10
$16,549.79
$16,572.19
$16,596.08
$16,621.29
$16,647.66
$16,675.06
$16,703.39
$16,732.55
$16,762.45

22

17266.5978

EOQ

Backorder Option

66.12

Total Cost
$16,459.96

Holding Cost
Order Cost
Material Cost
Total Cost
Column C

Costs per Order Quantity

$30,000.00
$25,000.00
$20,000.00
$15,000.00
$10,000.00
$5,000.00
$0.00
0.00

20.00

40.00

60.00

80.00

Order Quantity (Q)

100.00

120.00

140.00

ding Cost
er Cost
erial Cost
l Cost
umn C

120.00

140.00

Basic EOQ Model (Analytical Version)

D=
K=
h=
L=
WD =

Data
6000
$115
$4.20
9
250

(demand/year)
(setup cost)
(unit holding cost)
(lead time in days)
(working days/year)

Decision
Q = 573.211504221 (optimal order quantity)

Reorder Point
Annual Setup Cost
Annual Holding Cost
Total Variable Cost

Results
216
$1,203.74
$1,203.74
$2,407.49

Range Name
AnnualHoldingCost
AnnualSetupCost
D
h
K
L
Q
ReorderPoint
TotalVariableCost
WD

Cell
G7
G6
C4
C6
C5
C7
C11
G4
G8
C8

Spreadsheet Implementation of EOQ Model

Annual Demand
D
1000
Ordering Cost
S
$5.00
Holding Cost
H
$1.25
Lead Time
L
5
Item Cost
C
$12.50
Total annual inventory cost = Ordering cost + Carrying cost
Q
Order Quantity

(D/Q)*S
Ordering Cost
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
190

(Q/2)*H
Carrying Cost

Total Cost