introduction eoq
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Introduction EoqTRANSCRIPT
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INTRODUCTION
ECONOMIC ORDER QUANTITYIS THE NUMBER OF UNITS
THAT A COMPANY SHULD
ADD TO THE TOTAL COSTS OF
INVENTORY .EXAMPLE FOR INVENTORY
COST ARE AS FOLLOWS
HLODING COSTS
ORDER COSTS
FOMULA FOR EOQEOQ = √ 2∗ A∗Cp /Ch
A=demand for the year Cp=co! !o p"#c$ %&'"$
o()$(
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Ch=co! !o ho") o&$ *&%!
%&+$&!o(, -o( # ,$#(
DEFINATION &
EXPLANATION
SIE OF THE ORDERT WCHICH
GIVES MAXIMUM ECONOMY INPURCHASING ANY MATERIAL
ULTIMATELY CONTIBUTES
TOWARDS MAINTAING THE
MATERIALS AT THE OPTIMUM LEVEL
AT THE MAXIMUM COST . THE AMOUNT OF INVENTORY TO
BE ORDERED AT ONE TIME FOR
PURPOSES OF MINIMISINGANNUAL
INVENTORY COST .
USE OF EOQCONITNOUS REVIEW OF
INVENTORY SYSTEM
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MODEL FOR CALCULATING THE
APPROPRIATE REORDER POINT
THE OPITIMAL REORDER QUANTITYTOOL FOR DETERMINING
QUANTITY OFINVENTORY
APPLICATION
TO PART OF THE PURCHASES OF
ALMOST EVERY ORGANISATION
ELMINATE BURDEN OF
CALCULATION ALSO ENABLES THE
USE MORE COMPLEX FORMULAS
USEFUL FOR MATERIALS THAT
HAVEI. REASONABLY STEADY M
PREDICATABLE USAGEII. RELATIVELY LOW COST
III. SHORT LEAD TIME
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