(19B) Economic Ordering Quantity

11022018, 11:58 PM
(This post was last modified: 11272018 01:26 PM by SlideRule.)
Post: #1




(19B) Economic Ordering Quantity
From the Working with your Business Consultant Professional Calculator series, Manufacturing Consultant booklet, Economic Ordering Quantity;
formula EQN=SQRT(2×FIXCO×SALES÷MAIN(CARY%÷100×PRICE)) where 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." SlideRule 

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