Definition
EOQ is a formula used to determine the optimal order quantity that minimizes total inventory costs, including ordering and holding costs. EOQ = 2DS/H?? Where: D = Demand in units S = Ordering cost per order H = Holding cost per unit per year
Related Services
Inventory management, supply chain optimization, and operational efficiency consulting help businesses apply EOQ to reduce excess inventory costs.
Problem and Application
EOQ helps businesses optimize their inventory levels, avoiding both stockouts and overstocking. However, it assumes constant demand and ordering costs, which may not always be the case.
Conclusion
EOQ is a valuable tool for minimizing inventory costs but must be adjusted for fluctuations in demand and other factors.
