Economic Order Quantity

What is EOQ?

The ideal order quantity a company should purchase for its inventory given a cost set of production, demand rate, and other variables is known as:

This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to shrinkage (leakage) and insurance

The expenses incurred to create and process an order to a supplier.

The Ramen Company requires that 80,000 units of product “H” for the year. The units will be used evenly throughout the year. It costs $60 to place an order. Its carrying cost is $15 per unit. Calculate the EOQ.

A firm estimates that its annual carrying cost for material ABC is $.30 per lb, demand is 50 000 lbs and ordering costs are $100 per order.

Calculate the EOQ to the nearest pound.

Kenya’s Company has an annual demand of 5000 units. The company carrying cost per unit is $2 and the cost to place an order is $200.

Calculate the EOQ.

Reorder level determines how low inventory should be before reordering occurs.

The purchase-order lead time is the ________.

The maximum order level is: