The Economic Order Quantity (EOQ) model aims to minimize total costs by determining the optimal order quantity. It assumes annual demand is known and steady, lead times and delivery quantities are consistent, and there is unlimited production capacity with no quantity discounts. The EOQ is calculated using the annual demand, setup costs per order, and holding costs, to determine the order quantity that balances setup and holding costs at their minimum total.
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The Economic Order Quantity (EOQ) model aims to minimize total costs by determining the optimal order quantity. It assumes annual demand is known and steady, lead times and delivery quantities are consistent, and there is unlimited production capacity with no quantity discounts. The EOQ is calculated using the annual demand, setup costs per order, and holding costs, to determine the order quantity that balances setup and holding costs at their minimum total.
The Economic Order Quantity (EOQ) model aims to minimize total costs by determining the optimal order quantity. It assumes annual demand is known and steady, lead times and delivery quantities are consistent, and there is unlimited production capacity with no quantity discounts. The EOQ is calculated using the annual demand, setup costs per order, and holding costs, to determine the order quantity that balances setup and holding costs at their minimum total.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online from Scribd
The Economic Order Quantity (EOQ) model aims to minimize total costs by determining the optimal order quantity. It assumes annual demand is known and steady, lead times and delivery quantities are consistent, and there is unlimited production capacity with no quantity discounts. The EOQ is calculated using the annual demand, setup costs per order, and holding costs, to determine the order quantity that balances setup and holding costs at their minimum total.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online from Scribd
The Economic Order Quantity or "EOQ" is the order size that
"minimizes" Total Costs. Assumptions: i. Only one product is involved ii. Annual demand requirements known iii. Demand is even throughout the year iv. Lead time does not vary v. Each order is received in a single delivery vi. InIinite production capacity vii. There are no quantity discounts
II, Ddemand per year Ssetup or Ordering cost HHolding cost Then, Cost Holding Annual Cost) Setup or der Demand)(or 2(Annual