Professional Documents
Culture Documents
EOQ
EOQ
EOQ
Ordering cost
Ordering costs
Clerical/labor costs of
processing orders
Inspection and return of poor
quality products
Transport costs
Handling costs
Carrying cost
Holding costs
Storage costs
Rent/depreciation
Labor
EOQ=
2 AD OC /ORDER
CC /UNIT
( on basis of eoq)
AD
EOQ
( on basis of eoq)
EOQ
2
If that particular discounted price order size gives ( TOTAL ANNUAL ORDERING COST+
TOTAL ANNUAL CARRYING COST) minimum cost which is less, as compare to using EOQ
( TOTAL ANNUAL ORDERING COST+ TOTAL ANNUAL CARRYING COST) then in that special
circumstance we will be using that special order size not EOQ.
And never forget to give effect of discounted price in (PRICE PER ORDER)