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The economic order quantity (EOQ) is the order quantity that minimizes total holding and ordering costs for the
year. Even if all the assumptions dont hold exactly, the EOQ gives us a good indication of whether or not current
order quantities are reasonable.
Cost Minimizing Q
Assumptions:
Relatively uniform & known demand rate
Fixed item cost
Fixed ordering and holding cost
(Of course, these assumptions dont always hold, but the model is pretty robust in practice.)
What Would Holding and Ordering Costs Look Like for the Years?
1 of 3 09-Oct-17, 1:18 AM
ECONOMIC ORDER QUANTITY (EOQ) MODEL: Inventory Man... https://scm.ncsu.edu/scm-articles/article/economic-order-quantity-eoq...
EOQ Formula
Same Problem
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