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INTRODUCTION

ECONOMIC ORDER QUANTITYIS THE NUMBER OF UNITS

THAT A COMPANY SHULD

ADD TO THE TOTAL COSTS OF

INVENTORY .EXAMPLE FOR INVENTORY

COST ARE AS FOLLOWS

 HLODING COSTS

ORDER COSTS

FOMULA FOR EOQEOQ = √ 2∗ A∗Cp /Ch

   A=demand for the year   Cp=co! !o p"#c$ %&'"$

o()$(

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  Ch=co! !o ho") o&$ *&%!

%&+$&!o(, -o( # ,$#(

DEFINATION &

EXPLANATION

  SIE OF THE ORDERT WCHICH

GIVES MAXIMUM ECONOMY INPURCHASING ANY MATERIAL

ULTIMATELY CONTIBUTES

TOWARDS MAINTAING THE

MATERIALS AT THE OPTIMUM LEVEL

AT THE MAXIMUM COST .  THE AMOUNT OF INVENTORY TO

BE ORDERED AT ONE TIME FOR

PURPOSES OF MINIMISINGANNUAL

INVENTORY COST . 

USE OF EOQCONITNOUS REVIEW OF

INVENTORY SYSTEM

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  MODEL FOR CALCULATING THE

APPROPRIATE REORDER POINT

THE OPITIMAL REORDER QUANTITYTOOL FOR DETERMINING

QUANTITY OFINVENTORY

 APPLICATION

 TO PART OF THE PURCHASES OF

ALMOST EVERY ORGANISATION

ELMINATE BURDEN OF

CALCULATION ALSO ENABLES THE

USE MORE COMPLEX FORMULAS

USEFUL FOR MATERIALS THAT

HAVEI. REASONABLY STEADY M

PREDICATABLE USAGEII. RELATIVELY LOW COST

III. SHORT LEAD TIME

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