What Is Economic Order Quantity?

Economic order quantity (EOQ), through the balance of purchase and purchase cost and storage and storage cost accounting, in order to achieve the lowest total inventory cost of the best order quantity. Economic order lot is a type of fixed order lot model, which can be used to determine the quantity of an order (outsourcing or self-made). When an enterprise orders according to economic order quantities, the sum of order costs and storage costs can be minimized.

Economic order quantity

In order to produce certain products and order the required raw materials, what standard should be used to determine the order quantity? What batch quantity can be ordered to get the best

Study the cost of the order. In a small company, the job of ordering goods is simply a part-time job or the company's boss does the job. This makes it difficult to include a part of the salary of the part-time person in the cost of the order. However, even so, the cost of stationery, paper and secretarial work should be calculated. In large companies, it is easy to estimate the ordering costs because large companies have independent purchasing departments. We can easily send the total administrative expenses of the purchasing department as the whole year

Some types of fees change as the amount of storage changes, while other types of fees remain fairly long

Although the EOQ formula is relatively simple and clear, other factors must be considered in practical application. The most common are those related to various cost adjustments, which are adjustments that must be made in order to take advantage of special purchase forms and unitization characteristics. The three adjustments related to EOQ extension are: freight rate,

In reality, not all resupply situations are suitable for uniform use

Correct

(Q *-economic order quantity, D-annual demand for goods, S-cost per order, C-annual storage cost per unit of goods)