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Some Q’s :
What is Inventory?
Anything of value that can be used in the
future.

What is EOQ?
Economic Order Quantity.
Some Q’s :

What are the components of EOQ?

Inventory cost (Cs * i) which includes
storage cost, opportunity cost, interest on
the capital & Ordering cost/procurement
cost(cp).
Models :-

There are 4 types of model:-

i. EOQ with infinite replenishment rate

ii. EOQ with finite replenishment rate
iii. EOQ with price discount
iv. EOQ with shortages
MODEL – 1 :-
EOQ with infinite replenishment rate
1000
Stock

100
EOQ

Time
(lead time)
MODEL – 11 :-
EOQ with finite replenishment rate
1000
Stock
tory

d=
ven

c
on
)=In

su
mp
(P-d

tio
n

Time
t= batch time
MODEL – 111 :-
EOQ with Price Discount
Cost
per Cu1
unit

Cu2

100 Lot Size

(Price break up point)
 MODEL – 1V :-
EOQ with Shortage
1000
Stock

y Out of stock zone

Time
t1
t2
Utility of Inventory Models:-

It helps in minimizing the ICC

It helps in effectively choosing the EOQ
Useful in the time of estimation for the
future inventories.
 Y OU
A N K
TH