Scribd Logo
Upload

Welcome to Scribd!

  • EOQ - Online

    Uploaded by

    adithi.manjunath1
    3 views6 pages
    The document discusses the economic order quantity (EOQ) inventory management model. The EOQ model helps determine the optimal order quantity and frequency to meet constant demand while minimizing total inventory costs, which include fixed ordering costs and variable inventory holding costs. An example is provided where ordering 10 units once per day results in higher holding costs, while ordering 5 units twice per day reduces average inventory levels and holding costs but doubles ordering costs. The key factors in the EOQ model are demand rate, ordering costs, inventory holding costs, and how to calculate optimal order quantity, order frequency, average inventory levels, and total yearly costs.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses the economic order quantity (EOQ) inventory management model. The EOQ model helps determine the optimal order quantity and frequency to meet constant demand while minimizing total inventory costs, which include fixed ordering costs and variable inventory holding costs. An example is provided where ordering 10 units once per day results in higher holding costs, while ordering 5 units twice per day reduces average inventory levels and holding costs but doubles ordering costs. The key factors in the EOQ model are demand rate, ordering costs, inventory holding costs, and how to calculate optimal order quantity, order frequency, average inventory levels, and total yearly costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    3 views6 pages

    EOQ - Online

    Uploaded by

    adithi.manjunath1
    The document discusses the economic order quantity (EOQ) inventory management model. The EOQ model helps determine the optimal order quantity and frequency to meet constant demand while minimizing total inventory costs, which include fixed ordering costs and variable inventory holding costs. An example is provided where ordering 10 units once per day results in higher holding costs, while ordering 5 units twice per day reduces average inventory levels and holding costs but doubles ordering costs. The key factors in the EOQ model are demand rate, ordering costs, inventory holding costs, and how to calculate optimal order quantity, order frequency, average inventory levels, and total yearly costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    EOQ - Online

    Wednesday, 7 February 2024 10:33 AM

    Ø EOQ Model deals with Inventory Management Model - Economies of Scale


    When to order? How many to order?
    Objective: Make customers happy - product availability - Meet demand
    Maintain low cost
    Example:
    Demand - Constant - 10 units/day
    Lead Time - 0
    Inventory Holding Cost - Proportional to Inventory level
    Ordering Costs: FC/ Setup Costs + Variable Costs
    How many units will you order each time? Size of the order?
    (Frequency determined automatically)

    (no lead time; so order 10=10 demand)


    10 - once per day
    Average inventory level - 0+10/2 = 5
    High holding cost ; but save money on setup

    5 units - twice a day


    5 units - twice a day

    Average inventory level - 0+5/2 =2.5


    Double inventory ordering cost, lower holding cost

    Ø EOQ Model

    No. of products required by customer


    Cost to hold one unit of product
    Per order
    Per unit
    Yearly No. of Orders: R/Q
    Yearly Fixed Order Cost: SR/Q
    Average Inventory: Q/2
    Yearly Inventory Holding Cost = HQ/2

    You might also like