Ad free CAclubindia and daily updates on your mobile. Subscribe Now!

costing qurey

kannan (student) (41 Points)

11 December 2007

discuss briefly about EOQ,

Reply
Follow
Share

4 Replies

uma (student) (24 Points)
Replied 11 December 2007

economic order quantity, in that quantity a company incurre minimum cost. so this the best method to calculation of the minimum cost. In economic order quantity buying cost and carrying cost will be equal

Upgrade to CAclubindia Pro. Subscribe Now!

manikandan (Article trainee) (40 Points)
Replied 11 December 2007

to give a elaborate meaning EOQ is the best quaantity to order At EOQ ordering cost and carrying cost are equal.It is that quantity at which the total ordering cost,total carrying cost,material cost is lowest.for further query u can contact me in manikandan @ inbox.com

(Guest)

from the name itself we can say it is the quantity we have to order which makes the cost of purchase as minimum as possible for example we want to purchase some 40000 goods The purchase of 40000 can be made in different lots so that the cost of purchase of 40000 goods becomes minimum for this we have to consider the ordering costs and carrying costs At EOQ both ordering and carrying costs are equal

Manish Bajaj (CA) (47 Points)
Replied 12 December 2007

EOQ is basically that quantity that you order when your stock level reaches Re-Order Quantity Level. As mentioned in other posts the carrying and ordering cost is equal when such a quantity is ordered. However, it is always not possible to order the EOQ because of various limitations.