EOQ
Inventory Management
EOQ (Economic Order Quantity)
Economic Order Quantity
Order quantity that minimizes the combined annual cost of ordering and holding inventory under simplifying assumptions.
Examples
- 01Using EOQ, the planner calculates that ordering 1,600 boxes at a time balances ordering costs of EUR 60 and holding costs of 20 % per year.
- 02The material planner reviews EOQ results each year because setup costs and storage costs change.
- 03After setup times fall, the EOQ for the main part drops from 2,000 to 600 units, cutting average stock by 70 %.