In cases where the usage of materials or products is unpredictable, the formula becomes useless. The Economic Order Quantity formula only works when the holding costs, ordering costs, and annual demand is predictable. Economic Order Quantity (EOQ) gives the perfect standard quantity used by a company to calculate the inventory. It also helps in minimizing […]

Ordering the optimal number of products needed helps the company to keep its costs low and prevent dead stocks. The aim of calculating the Economic Order Quantity is to determine the number of inventory to be attached to each order at the lowest possible costs. Ordering cost is inversely proportional to holding cost if the […]