Economic Order Quantity (EOQ)

Formulate :

EOq
___________
/ 2x AD x Oc
/ ------------
_/ Units$ x Hc%


ATC

ATC
= AOC + AHC

= (AD/EOQ x OC) + (EOQ/2 x $units x HC%)


The Assumption of EOQ

(1) Demand is known, constant and independent
(2) Lead time is known and constant
(3) Quality discount is impossible
(4) Receipt of Inventory is instantaneous and complete
(5) The only varible cost is the cost of setting up or placing orders and the cost of holding or storing inventory over time.

Love,
♥ Jasmine