Economic Order Quantity (EOQ)
EOQ is the optimal order quantity that minimizes total inventory costs, including holding costs and order costs. It helps determine the most efficient inventory replenishment quantity.
EOQ is the optimal order quantity that minimizes total inventory costs, including holding costs and order costs. It helps determine the most efficient inventory replenishment quantity.
Introduction: Economic Order Quantity (EOQ) is a mathematical model used in inventory management to determine the optimal order size that minimizes the total cost of inventory. This includes costs related to ordering, holding, and shortages. By calculating the EOQ, businesses can achieve a balance between these competing costs, leading to increased efficiency, reduced waste, and improved cash flow. The EOQ formula is a cornerstone of operations management and supply chain optimization, especially for businesses looking to streamline operations and reduce inventory costs in competitive markets.
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Benefits of Implementing EOQ: