I hope that you have enjoyed the article “Purchasing & Inventory Management Hook Up!” As promised in that article, here’s the EOQ formula:
EOQ = Economic Order Quantity
ACPO = Acquisition Costs Per Order
AUU = Annual Usage in Units
UC = Unit Cost
CCP = Carrying Cost Percentage
So, if you know that it costs you $150 in overhead per order, you use 5,000 widgets a year, you pay $200 per widget, and your Finance Department tells you that annual carrying costs are equal to 20% of the value of the goods in stock, you should order…
194 widgets at a time.
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- Impact of Inventory
- Inventory Purchasing
- Profitable Inventory Management and Control
- Inventory Turnover Ratio
- Purchasing and Inventory Management
- Myth: Learning Inventory Management Is Painful
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