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(19B) Economic Ordering Quantity - Printable Version

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(19B) Economic Ordering Quantity - SlideRule - 11-02-2018 11:58 PM

From the Working with your Business Consultant Professional Calculator series, Manufacturing Consultant booklet, Economic Ordering Quantity;
FIXCO = fixed cost of placing and receiving an order
SALES = annual unit sales
CARY% = carrying cost as a percentage of inventory value
PRICE = purchase price per unit of inventroy
"The economic ordering quantity is the optimum quantity to order each
time an order is placed. It is based on the cost of placing and receiving
an order, annual sales, carrying costs (including warehousing costs,
interest on funds tied up in inventroy, insurance and obsolescence)
and the purchase price of the goods.
The equation above is useful assuming that usage is at a constant rate
and that delivery lead times are constant."