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  • Inventory: Economic Order Quantity Model

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    Eric Muchogo
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    This document presents an economic order quantity (EOQ) model to determine the optimal order quantity that minimizes total inventory costs. The model inputs include demand rate, ordering costs, holding costs, unit price, lead time, and safety stock. It then calculates the EOQ, maximum inventory, average inventory, number of orders, holding costs, ordering costs, unit costs, total costs, reorder point, and reorder point plus safety stock. The optimal order quantity is 20 units with a total cost of $1,500.

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    Economic_Order_Quantity_SpreadSheet

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    This document presents an economic order quantity (EOQ) model to determine the optimal order quantity that minimizes total inventory costs. The model inputs include demand rate, ordering costs, holding costs, unit price, lead time, and safety stock. It then calculates the EOQ, maximum inventory, average inventory, number of orders, holding costs, ordering costs, unit costs, total costs, reorder point, and reorder point plus safety stock. The optimal order quantity is 20 units with a total cost of $1,500.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    28 views4 pages

    Inventory: Economic Order Quantity Model

    Uploaded by

    Eric Muchogo
    This document presents an economic order quantity (EOQ) model to determine the optimal order quantity that minimizes total inventory costs. The model inputs include demand rate, ordering costs, holding costs, unit price, lead time, and safety stock. It then calculates the EOQ, maximum inventory, average inventory, number of orders, holding costs, ordering costs, unit costs, total costs, reorder point, and reorder point plus safety stock. The optimal order quantity is 20 units with a total cost of $1,500.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 4

    Inventory Economic Order Quantity Model

    Enter the data in the shaded area

    500
    Data
    Demand rate, D 200 450
    Ordering/Setup cost, S 25 400
    Holding cost, H 5 350
    Unit Price, P 5 300
    Daily demand rate, d 80

    Cost ($)
    250
    Replinishment cycle/Lead time i 5
    200
    Safety Stock 40
    150
    Results 100
    EOQ/Optimal Order Quantity, 44.721359549996 50
    Maximum Inventory 44.721359549996 0
    Average Inventory 22.360679774998 11.18 14.91 18.63 22.36 26.09
    Number of Orders 4.4721359549996

    Holding cost $111.80


    Order cost $111.80

    Unit costs $1,000.00


    Total cost, Tc $1,223.61
    Reorder Point 400
    Reorder Point + Safety Stock 440

    COST TABLE Start at 11.1803398875 Increment by 3.7267799625

    Q Setup/Order cosHolding cost Total cost


    11.180339887499 447.2135955 27.95084971875 475.1644452187
    14.907119849999 335.410196625 37.267799625 372.67799625
    18.633899812498 268.3281573 46.58474953125 314.9129068312
    22.360679774998 223.60679775 55.90169943749 279.5084971875
    26.087459737498 191.6629695 65.21864934374 256.8816188437
    29.814239699997 167.705098312 74.53559924999 242.2406975625
    33.541019662497 149.0711985 83.85254915624 232.9237476562
    37.267799624997 134.16407865 93.16949906249 227.3335777125
    40.994579587496 121.967344227 102.4864489687 224.453793196
    44.721359549996 111.803398875 111.803398875 223.60679775
    48.448139512496 103.203137423 121.1203487812 224.3234862043
    52.174919474995 95.83148475 130.4372986875 226.2687834375
    55.901699437495 89.4427191 139.7542485937 229.1969676937
    59.628479399994 83.8525491562 149.0711985 232.9237476562
    63.355259362494 78.9200462647 158.3881484062 237.3081946709
    67.082039324994 74.53559925 167.7050983125 242.2406975625
    70.808819287493 70.6126729737 177.0220482187 247.6347211924
    74.535599249993 67.082039325 186.338998125 253.42103745
    78.262379212493 63.8876565 195.6559480312 259.5436045312
    81.989159174992 60.9836721136 204.9728979375 265.9565700511
    85.715939137492 58.3322081087 214.2898478437 272.6220559524
    89.442719099992 55.9016994375 223.60679775 279.5084971875
    93.169499062491 53.66563146 232.9237476562 286.5893791162
    96.896279024991 51.6015687115 242.2406975625 293.842266274
    Inventory: Cost vs Quantity

    18.63 22.36 26.09 29.81 33.54 37.27 40.99 44.72 48.45 52.17 55.90 59.63 63.36 67.08 7
    Order Quantity (Q)

    Setup/Order cost Holding cost Total cost


    tity

    59.63 63.36 67.08 70.81 74.54 78.26 81.99 85.72 89.44 93.17 96.90

    Total cost
    Inventory Economic Order Quantity Model
    Enter the data in the shaded area

    Data
    Demand rate, D 200
    Ordering/Setup cost, S 25
    Holding cost, H 25
    Unit Price, P 5
    Daily demand rate, d 80
    Replinishment Cycle/Lead time i 5
    Safety Stock 40

    Results
    EOQ/Optimal Order Quantity, 20
    Maximum Inventory 20
    Average Inventory 10
    Number of Orders 10

    Holding cost $250.00


    Order cost $250.00

    Unit costs $1,000.00


    Total cost, Tc $1,500.00
    Reorder Point 400
    Reorder Point + Safety Stock 440

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