discuss briefly about EOQ,
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
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.
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