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Economic Order Quantity
EOQ
Difference between revisions of "EOQ"
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{{this}} or Economic Order Quantity Optimization is a [[:Category:Term|Term]] describing the [[:Category:Practice|Practice]] to determine the optimal quantity for replenishment orders. The {{this}} model balances inventory costs with ordering costs. | {{this}} or Economic Order Quantity Optimization is a [[:Category:Term|Term]] describing the [[:Category:Practice|Practice]] to determine the optimal quantity for replenishment orders. The {{this}} model balances inventory costs with ordering costs. | ||
===Calculation=== | ===Calculation=== | ||
| − | {{math|{{this}}|{{sqrt|{{frac| | + | {{math|{{this}}|{{sqrt|{{frac|2 × D × S|H}}|3}}}} |
where | where | ||
* D = Annual demand | * D = Annual demand | ||
Revision as of 23:58, 12 August 2017
Economic Order Quantity or Economic Order Quantity Optimization is a Term describing the Practice to determine the optimal quantity for replenishment orders. The Economic Order Quantity model balances inventory costs with ordering costs.
Calculation
| Economic Order Quantity | |||||
| = |
| ||||
where
- D = Annual demand
- S = Ordering costs per order
- h = Annual inventory holding cost
Alternative names for Economic Order Quantity include: Optimal Order Quantity.
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