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Hello,
I have a blog with information on reorder dates. I have a few posts that discuss EOQ.
This is my post from Feb 28th, 2008(http://excelevolution.wordpress.com/2008/02/28/eoq-economic-order-quantity/) I hope this information will be somewhat useful to you. The EOQ (Economic Order Quantity) is the most cost effective amount to order each time stock needs to be replenished. EOQ is, for all intents and purposes, an accounting formula that determines the point at which the combination of order costs and inventory carrying costs are the least. In purchase-to-stock scenarios, this is known as the order quantity and in make-to-stock manufacturing situations, known as the production lot size. While the EOQ may not be relevant in every inventory situation, most companies will find it beneficial in at least some aspect of their operation. The optimal EOQ result in this table does not affect the EOQ section in the main part of the algorithm and may benefit from some adjustment. The rationale for this is that the optimal EOQ is just the mathematical figure. Please read the EOQ notes at the base of the algorithm to get an idea of how the optimal EOQ can be further refined by taking into account other factors. Once established, this 'corrected' figure can be put into the 'Number of pallets (units) per container (EOQ)' section. The EOQ notes are as follows: *The optimal EOQ will be further refined by taking into account the following factors: If the number of units is too large, these issues may arise: Additional storage space requirements, financial outlay may be too high, risk of spoilage, risk of obsolescence, lost opportunities with invested capital, higher insurance costs & more inventory available to be stolen & damaged. If the number of units is too small, these issues may arise: Inability to benefit greatly from current pricing, quantity discounts may not be offered, more risk of damage whilst in transit if not full multiples, shipping & receiving costs per unit may be higher. Cheers, Peter Phillips
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Why are costs important?
They reduce profit.
In order to reduce labor costs what might a company do?
some companies have outsourced jobs to Another Country as they can reduce labor costs that way.
Whats is the Journal entery for costs of issuing stock?
Debit Capital stock xx Credit Cash xx Generally you would offset costs of issuing common or preferred stock against the similar equity account.
Is treasury stock the same as capital stock?
Treasury stock is contra of capital stock used by company to purchase own capital stock to reduce the paid in capital.
What are the components of ordering cost?
eoq =economic ordering cost is constant
What are the primary variables being balanced in the EOQ inventory model?
The primary variables being balanced in the EOQ model are carrying costs and ordering costs. The more frequent orders are placed the lower the firm's carrying costs and the higher its ordering costs.
How lead time is related to EOQ?
Lead time is the time it takes for an order to be delivered once it is placed, while Economic Order Quantity (EOQ) is the optimal order quantity that minimizes total inventory costs. Lead time influences the reorder point in EOQ calculations – a longer lead time may require a higher reorder point to avoid stockouts. It is important to consider lead time variability and safety stock when calculating EOQ to ensure continuous supply chain operations.
What caused many firms to abandon the EOQ model for JIT?
Many firms abandoned the EOQ (Economic Order Quantity) model for Just-in-Time (JIT) due to the need for more flexibility and responsiveness in their production processes. JIT allows for production to be aligned more closely with customer demand, reduces inventory holding costs, and improves overall efficiency by eliminating waste and improving flow throughout the production process.
Criticism to Economic order quantity?
The assumptions included in the EOQ models are simplistic;The real cost of stock in operations are not as assumed in EOQ models;The models are really descriptive and should not be used as prescriptive devices.
Compare ABC analysis with eoq method?
ABC analysis classifies items based on their importance, while EOQ (Economic Order Quantity) method calculates the optimal order quantity to minimize total inventory costs. ABC analysis helps prioritize items for inventory management, whereas EOQ helps determine the quantity of each item to order to balance holding and ordering costs efficiently.
What are the uses of EOQ?
"what are the benefit of using EOQ?"
What is ordering quantity?
The Economic Order Quantity (EOQ) is the number of units that a company should add to inventory with each order to minimize the total costs of inventory-such as holding costs, and order costs
What are the benefit of using EOQ?
"what are the benefit of using EOQ?"
What is economic order quantity?
The Economic Order Quantity (EOQ) is the number of units that a company should add to inventory with each order to minimize the total costs of inventory-such as holding costs, and order costs
Why do US companies outsource jobs?
To reduce labor costs
What is the difference between EOQ and MRP?
apa perbedaan antara EOQ DAN MRP
What are difference of reorder level and eoq?
what is the difference between Re oreder level and EOQ
