INTRODUCTION

ECONOMIC ORDER QUANTITY

IS THE NUMBER OF UNITS
THAT A COMPANY SHULD
ADD TO THE TOTAL COSTS OF
INVENTORY .
EXAMPLE FOR INVENTORY
COST ARE AS FOLLOWS
HLODING COSTS
ORDER COSTS

FOMULA FOR EOQ

EOQ =

2ACp

/Ch

A=demand for the year

Cp=cost to place single
order

 Ch=cost to hold one unit

inventory for a year

DEFINATION &
EXPLANATION
SIZE OF THE ORDERT WCHICH
GIVES MAXIMUM ECONOMY IN
PURCHASING ANY MATERIAL
&ULTIMATELY CONTIBUTES
TOWARDS MAINTAING THE
MATERIALS AT THE OPTIMUM LEVEL
&AT THE MAXIMUM COST .
THE AMOUNT OF INVENTORY TO
BE ORDERED AT ONE TIME FOR
PURPOSES OF MINIMISINGANNUAL
INVENTORY COST .

USE OF EOQ
CONITNOUS REVIEW OF
INVENTORY SYSTEM

 MODEL FOR CALCULATING THE

APPROPRIATE REORDER POINT &
THE OPITIMAL REORDER QUANTITY
TOOL FOR DETERMINING
QUANTITY OF
INVENTORY

APPLICATION
TO PART OF THE PURCHASES OF
ALMOST EVERY ORGANISATION
ELMINATE BURDEN OF
CALCULATION &ALSO ENABLES THE
USE MORE COMPLEX FORMULAS
USEFUL FOR MATERIALS THAT
HAVE
I. REASONABLY STEADY & M
PREDICATABLE USAGE
II. RELATIVELY LOW COST
III. SHORT LEAD TIME