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Template:Corporate finance Economic order quantity is the order quantity that minimizes total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Wilson EOQ Model or Wilson Formula. The model was developed by Ford W. Harris in 1913,^[1] but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis.^[2]

Overview

EOQ applies only when demand for a product is constant over the year and each new order is delivered in full when inventory reaches zero. There is a fixed cost for each order placed, regardless of the number of units ordered. There is also a cost for each unit held in storage, commonly known as holding cost, sometimes expressed as a percentage of the purchase cost of the item.

We want to determine the optimal number of units to order so that we minimize the total cost associated with the purchase, delivery and storage of the product.

The required parameters to the solution are the total demand for the year, the purchase cost for each item, the fixed cost to place the order and the storage cost for each item per year. Note that the number of times an order is placed will also affect the total cost, though this number can be determined from the other parameters.

Underlying assumptions

The ordering cost is constant.
The rate of demand is known, and spread evenly throughout the year.
The lead time is fixed.
The purchase price of the item is constant i.e. no discount is available
The replenishment is made instantaneously, the whole batch is delivered at once.
Only one product is involved.

EOQ is the quantity to order, so that the sum of ordering cost and holding cost is at its minimum. These costs will be equal to one another at the minimized cost point.

Variables

$c$ = purchase price, unit production cost
$Q$ = order quantity
$Q^{*}$ = optimal order quantity
$D$ = annual demand quantity
$K$ = fixed cost per order, setup cost (not per unit, typically cost of ordering and shipping and handling. This is not the cost of goods)
$h$ = annual holding cost per unit, also known as carrying cost or storage cost (capital cost, warehouse space, refrigeration, insurance, etc. usually not related to the unit production cost)

The Total Cost function

The single-item EOQ formula finds the minimum point of the following cost function:

Total Cost = purchase cost or production cost + ordering cost + holding cost

- Purchase cost: This is the variable cost of goods: purchase unit price × annual demand quantity. This is c × D

- Ordering cost: This is the cost of placing orders: each order has a fixed cost K, and we need to order D/Q times per year. This is K × D/Q

- Holding cost: the average quantity in stock (between fully replenished and empty) is Q/2, so this cost is h × Q/2

$T C = c D + \frac{D K}{Q} + \frac{h Q}{2}$ .

To determine the minimum point of the total cost curve, partially differentiate the total cost with respect to Q (assume all other variables are constant) and set to 0:

$0 = - \frac{D K}{Q^{2}} + \frac{h}{2}$

Solving for Q gives Q* (the optimal order quantity):

$Q *^{2} = \frac{2 D K}{h}$

Therefore: $Q^{*} = \sqrt{\frac{2 D K}{h}}$ .

Q* is independent of c; it is a function of only K, D, h.

The optimal value Q* may also be found by recognising that^[3]

$T C = \frac{D K}{Q} + \frac{h Q}{2} + c D = \frac{h}{2 Q} (Q - \sqrt{2 D K / h})^{2} + \sqrt{2 h D K} + c D,$ where the non-negative quadratic term disappears for $Q = \sqrt{2 D K / h},$ which provides the cost minimum $T C_{m i n} = \sqrt{2 h D K} + c D .$

Extensions

Several extensions can be made to the EOQ model, including backordering costs and multiple items. Additionally, the economic order interval can be determined from the EOQ and the economic production quantity model (which determines the optimal production quantity) can be determined in a similar fashion.

A version of the model, the Baumol-Tobin model, has also been used to determine the money demand function, where a person's holdings of money balances can be seen in a way parallel to a firm's holdings of inventory.^[4]

Example

Suppose annual requirement quantity (D) = 10000 units
Cost per order (K) = $2
Cost per unit (c)= $8
Carrying cost percentage (h/c)(percentage of c) = 0.02
Annual carrying cost per unit (h) = $0.16

Economic order quantity = $\sqrt{\frac{2 D * K}{h}}$ $= \sqrt{\frac{2 * 10000 * 2}{8 * 0.02}}$ = 500 units

Number of orders per year (based on EOQ) $= \frac{10000}{500} = 20$

Total cost $= c * D + K (D / E O Q) + h (E O Q / 2)$

Total cost $= 8 * 10000 + 2 (10000 / 500) + 0.16 (500 / 2) = $ 80080$

If we check the total cost for any order quantity other than 500(=EOQ), we will see that the cost is higher. For instance, supposing 600 units per order, then

Total cost $= 8 * 10000 + 2 (10000 / 600) + 0.16 (600 / 2) = $ 80081$

Similarly, if we choose 300 for the order quantity then

Total cost $= 8 * 10000 + 2 (10000 / 300) + 0.16 (300 / 2) = $ 80091$

This illustrates that the Economic Order Quantity is always in the best interests of the entity.

References

↑ Template:Cite jstor
↑ Many property agents need to declare for the PIC grant in Singapore. However, not all of them know find out how to do the correct process for getting this PIC scheme from the IRAS. There are a number of steps that you need to do before your software can be approved.

Naturally, you will have to pay a safety deposit and that is usually one month rent for annually of the settlement. That is the place your good religion deposit will likely be taken into account and will kind part or all of your security deposit. Anticipate to have a proportionate amount deducted out of your deposit if something is discovered to be damaged if you move out. It's best to you'll want to test the inventory drawn up by the owner, which can detail all objects in the property and their condition. If you happen to fail to notice any harm not already mentioned within the inventory before transferring in, you danger having to pay for it yourself.

In case you are in search of an actual estate or Singapore property agent on-line, you simply should belief your intuition. It's because you do not know which agent is nice and which agent will not be. Carry out research on several brokers by looking out the internet. As soon as if you end up positive that a selected agent is dependable and reliable, you can choose to utilize his partnerise in finding you a home in Singapore. Most of the time, a property agent is taken into account to be good if he or she locations the contact data on his website. This may mean that the agent does not mind you calling them and asking them any questions relating to new properties in singapore in Singapore. After chatting with them you too can see them in their office after taking an appointment.

Have handed an trade examination i.e Widespread Examination for House Brokers (CEHA) or Actual Property Agency (REA) examination, or equal; Exclusive brokers are extra keen to share listing information thus making certain the widest doable coverage inside the real estate community via Multiple Listings and Networking. Accepting a severe provide is simpler since your agent is totally conscious of all advertising activity related with your property. This reduces your having to check with a number of agents for some other offers. Price control is easily achieved. Paint work in good restore-discuss with your Property Marketing consultant if main works are still to be done. Softening in residential property prices proceed, led by 2.8 per cent decline within the index for Remainder of Central Region

Once you place down the one per cent choice price to carry down a non-public property, it's important to accept its situation as it is whenever you move in – faulty air-con, choked rest room and all. Get round this by asking your agent to incorporate a ultimate inspection clause within the possibility-to-buy letter. HDB flat patrons routinely take pleasure in this security net. "There's a ultimate inspection of the property two days before the completion of all HDB transactions. If the air-con is defective, you can request the seller to repair it," says Kelvin.

15.6.1 As the agent is an intermediary, generally, as soon as the principal and third party are introduced right into a contractual relationship, the agent drops out of the image, subject to any problems with remuneration or indemnification that he could have against the principal, and extra exceptionally, against the third occasion. Generally, agents are entitled to be indemnified for all liabilities reasonably incurred within the execution of the brokers´ authority.

To achieve the very best outcomes, you must be always updated on market situations, including past transaction information and reliable projections. You could review and examine comparable homes that are currently available in the market, especially these which have been sold or not bought up to now six months. You'll be able to see a pattern of such report by clicking here It's essential to defend yourself in opposition to unscrupulous patrons. They are often very skilled in using highly unethical and manipulative techniques to try and lure you into a lure. That you must also protect your self, your loved ones, and personal belongings as you'll be serving many strangers in your home. Sign a listing itemizing of all of the objects provided by the proprietor, together with their situation. HSR Prime Recruiter 2010
↑ One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting

In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang

Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules

Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.

A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running

The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more

There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang
↑ Andrew Caplin and John Leahy, "Economic Theory and the World of Practice: A Celebration of the (S,s) Model", Journal of Economic Perspectives, Winter 2010, V 24, N 1

External links

de:Klassische Losformel

[1] Template:Cite jstor

[Hax1984-2] Many property agents need to declare for the PIC grant in Singapore. However, not all of them know find out how to do the correct process for getting this PIC scheme from the IRAS. There are a number of steps that you need to do before your software can be approved.

Naturally, you will have to pay a safety deposit and that is usually one month rent for annually of the settlement. That is the place your good religion deposit will likely be taken into account and will kind part or all of your security deposit. Anticipate to have a proportionate amount deducted out of your deposit if something is discovered to be damaged if you move out. It's best to you'll want to test the inventory drawn up by the owner, which can detail all objects in the property and their condition. If you happen to fail to notice any harm not already mentioned within the inventory before transferring in, you danger having to pay for it yourself.

In case you are in search of an actual estate or Singapore property agent on-line, you simply should belief your intuition. It's because you do not know which agent is nice and which agent will not be. Carry out research on several brokers by looking out the internet. As soon as if you end up positive that a selected agent is dependable and reliable, you can choose to utilize his partnerise in finding you a home in Singapore. Most of the time, a property agent is taken into account to be good if he or she locations the contact data on his website. This may mean that the agent does not mind you calling them and asking them any questions relating to new properties in singapore in Singapore. After chatting with them you too can see them in their office after taking an appointment.

Have handed an trade examination i.e Widespread Examination for House Brokers (CEHA) or Actual Property Agency (REA) examination, or equal; Exclusive brokers are extra keen to share listing information thus making certain the widest doable coverage inside the real estate community via Multiple Listings and Networking. Accepting a severe provide is simpler since your agent is totally conscious of all advertising activity related with your property. This reduces your having to check with a number of agents for some other offers. Price control is easily achieved. Paint work in good restore-discuss with your Property Marketing consultant if main works are still to be done. Softening in residential property prices proceed, led by 2.8 per cent decline within the index for Remainder of Central Region

Once you place down the one per cent choice price to carry down a non-public property, it's important to accept its situation as it is whenever you move in – faulty air-con, choked rest room and all. Get round this by asking your agent to incorporate a ultimate inspection clause within the possibility-to-buy letter. HDB flat patrons routinely take pleasure in this security net. "There's a ultimate inspection of the property two days before the completion of all HDB transactions. If the air-con is defective, you can request the seller to repair it," says Kelvin.

15.6.1 As the agent is an intermediary, generally, as soon as the principal and third party are introduced right into a contractual relationship, the agent drops out of the image, subject to any problems with remuneration or indemnification that he could have against the principal, and extra exceptionally, against the third occasion. Generally, agents are entitled to be indemnified for all liabilities reasonably incurred within the execution of the brokers´ authority.

To achieve the very best outcomes, you must be always updated on market situations, including past transaction information and reliable projections. You could review and examine comparable homes that are currently available in the market, especially these which have been sold or not bought up to now six months. You'll be able to see a pattern of such report by clicking here It's essential to defend yourself in opposition to unscrupulous patrons. They are often very skilled in using highly unethical and manipulative techniques to try and lure you into a lure. That you must also protect your self, your loved ones, and personal belongings as you'll be serving many strangers in your home. Sign a listing itemizing of all of the objects provided by the proprietor, together with their situation. HSR Prime Recruiter 2010

[3] One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting

In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang

Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules

Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.

A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running

The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more

There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang

[jep-4] Andrew Caplin and John Leahy, "Economic Theory and the World of Practice: A Celebration of the (S,s) Model", Journal of Economic Perspectives, Winter 2010, V 24, N 1

[1]

[2]

[3]

[4]

@@ Line 1: / Line 1: @@
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+{{Corporate finance}}
+'''Economic order quantity''' is the order quantity that minimizes total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as  '''Wilson EOQ Model''' or '''Wilson Formula'''. The model was developed by Ford W. Harris in 1913,<ref>{{cite jstor|170962}}</ref> but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis.<ref name=Hax1984>{{Citation
+ | title = Production and Operations Management
+ | url = http://catalogue.nla.gov.au/Record/772207
+ | year = 1984
+ | author = Hax, AC and Candea, D.
+ | publisher = Prentice-Hall, Englewood Cliffs, NJ
+ | pages = 135
+}}</ref>
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+==Overview==
+EOQ applies only when demand for a product is constant over the year and each new order is delivered in full when inventory reaches zero. There is a fixed cost for each order placed, regardless of the number of units ordered. There is also a cost for each unit held in storage, commonly known as [[holding cost]], sometimes expressed as a percentage of the purchase cost of the item.
+We want to determine the optimal number of units to order so that we minimize the total cost associated with the purchase, delivery and storage of the product.
+The required parameters to the solution are the total demand for the year, the purchase cost for each item, the fixed cost to place the order and the storage cost for each item per year. Note that the number of times an order is placed will also affect the total cost, though this number can be determined from the other parameters.
+==Underlying assumptions==
+# The ordering cost is constant.
+# The rate of demand is known, and spread evenly throughout the year.
+# The [[lead time]] is fixed.
+# The purchase price of the item is constant i.e. no discount is available
+# The replenishment is made instantaneously, the whole batch is delivered at once.
+# Only one product is involved.
+EOQ is the quantity to order, so that the sum of ordering cost and holding cost is at its minimum. These costs will be equal to one another at the minimized cost point.
+==Variables==
+*<math>c</math> = purchase price, unit production cost
+*<math>Q</math> = order quantity
+*<math>Q^*</math> = optimal order quantity
+*<math>D</math> = annual demand quantity
+*<math>K</math> = fixed cost per order, setup cost (''not'' per unit, typically cost of ordering and shipping and handling. This is not the cost of goods)
+*<math>h</math> = annual holding cost per unit, also known as carrying cost or storage cost (capital cost, warehouse space, refrigeration, insurance, etc. usually not related to the unit production cost)
+==The Total Cost function==
+The single-item EOQ formula finds the minimum point of the following cost function:
+Total Cost = purchase cost or production cost + ordering cost + holding cost
+- Purchase cost: This is the variable cost of goods: purchase unit price &times; annual demand quantity. This is c &times; D
+- Ordering cost: This is the cost of placing orders: each order has a fixed cost K, and we need to order D/Q times per year. This is K &times; D/Q
+- Holding cost: the average quantity in stock (between fully replenished and empty) is Q/2, so this cost is h &times; Q/2
+<math>TC = cD + {\frac{DK}{Q}} + {\frac{hQ}{2}}</math>.
+To determine the minimum point of the total cost curve, partially differentiate the total cost with respect to Q (assume all other variables are constant) and set to 0:
+<math>{0} = -{\frac{DK}{Q^2}}+{\frac{h}{2}}</math>
+Solving for Q gives Q* (the optimal order quantity):
+<math>Q*^2={\frac{2DK}{h}}</math>
+Therefore: <math>Q^* = \sqrt{\frac{2DK}{h}} </math>.
+Q* is independent of c; it is a function of only K, D, h.
+The optimal value Q* may also be found by recognising that<ref>{{Cite journal | last1 = Grubbström | first1 = Robert W. | doi = 10.1016/0925-5273(95)00109-3 | title = Modelling production opportunities — an historical overview | journal = International Journal of Production Economics| volume = 41| pages = 1–14 | year = 1995}}</ref>
+<math>TC = {\frac{DK}{Q}} + {\frac{hQ}{2}} + cD ={\frac{h}{2Q}}(Q - \sqrt{2DK/h})^2 +  \sqrt{2hDK} +cD,  </math>
+where the non-negative quadratic term disappears for <math>Q = \sqrt{2DK/h}, </math> which provides the cost minimum <math>TC_{min} =  \sqrt{2hDK} + cD.  </math>
+==Extensions==
+Several extensions can be made to the EOQ model, including backordering costs and multiple items.  Additionally, the [[economic order interval]] can be determined from the EOQ and the [[economic production quantity]] model (which determines the optimal production quantity) can be determined in a similar fashion.
+A version of the model, the [[Baumol-Tobin]] model, has also been used to determine the [[Money_demand#Inventory_models|money demand]] function, where a person's holdings of money balances can be seen in a way parallel to a firm's holdings of inventory.<ref name=jep>Andrew Caplin and John Leahy, "Economic Theory and the World of Practice: A Celebration of the (S,s) Model", ''[[Journal of Economic Perspectives]]'', Winter 2010, V 24, N 1</ref>
+==Example==
+*Suppose annual requirement quantity (D) = 10000 units
+*Cost per order (K) = $2
+*Cost per unit (c)= $8
+*Carrying cost percentage (h/c)(percentage of c) = 0.02
+*Annual carrying cost per unit (h) = $0.16
+Economic order quantity = <math> \sqrt{\frac{2D*K}{h}} </math> <math> = \sqrt{\frac{2*10000*2}{8*0.02}} </math> = 500 units
+Number of orders per year (based on EOQ) <math> = {\frac{10000}{500}} = 20 </math>
+Total cost <math> = c*D + K (D/EOQ) + h (EOQ/2) </math>
+Total cost <math> = 8*10000 + 2 (10000/500) + 0.16 (500/2) = $80080 </math>
+If we check the total cost for any order quantity other than 500(=EOQ), we will see that the cost is higher.  For instance, supposing 600 units per order, then
+Total cost <math> = 8*10000 + 2 (10000/600) + 0.16 (600/2) = $80081 </math>
+Similarly, if we choose 300 for the order quantity then
+Total cost <math> = 8*10000 + 2 (10000/300) + 0.16 (300/2) = $80091</math>
+This illustrates that the Economic Order Quantity is always in the best interests of the entity.
+==See also==
+* Demand is random: Classical [[Newsvendor model]]
+* Demand varies over time: [[Dynamic lot size model]]
+* Several products produced on the same machine: [[Economic Lot Scheduling Problem]]
+* [[Reorder point]]
+==References==
+<references/>
+==Further reading==
+* Harris, Ford W. ''Operations Cost'' (Factory Management Series), Chicago:  Shaw (1915).
+* Wilson, R. H. "A Scientific Routine for Stock Control" Harvard Business Review, 13, 116-128 (1934).
+==External links==
+*[http://www.logisitik.com/learning-center/inventory-management/item/466-economic-order-quantity-eoq-model.html The EOQ Model]
+* http://www.inventoryops.com/economic_order_quantity.htm
+* [https://play.google.com/store/apps/details?id=com.matterofbiz.simple.eoq.calculator Simple EOQ Calculator for Android devices]
+{{DEFAULTSORT:Economic Order Quantity}}
+[[Category:Management]]
+[[Category:Production and manufacturing]]
+[[Category:Supply chain management]]
+[[Category:Operations research]]
+[[Category:Production economics]]
+[[de:Klassische Losformel]]

Ramanujan graph: Difference between revisions

Revision as of 18:23, 7 September 2013

Contents

Overview

Underlying assumptions

Variables

The Total Cost function

Extensions

Example

See also

References

Further reading

External links

Navigation menu

Ramanujan graph: Difference between revisions

Revision as of 18:23, 7 September 2013

Overview

Underlying assumptions

Variables

The Total Cost function

Extensions

Example

See also

References

Further reading

External links

Navigation menu

Search