Economic Order Quantity (EOQ)
Σύντομη απάντηση
The optimal order quantity that minimises the combined total of ordering and holding costs.
Βασικά συμπεράσματα
- Assumes stable demand (complement with forecasting)
- Must be adjusted to MOQ and volume discounts
- Sensitive to real holding costs
What EOQ is
EOQ (Economic Order Quantity) is the order quantity that balances ordering cost against inventory holding cost. Wilson formula: EOQ = √(2 × D × S / H), where D = annual demand, S = cost per order, H = holding cost per unit/year.
Why it matters to the board
EOQ directly optimises working capital: orders too small → high admin and freight costs; orders too large → locked stock and dead-stock risk.
Practical limits
- Assumes stable demand (complement with forecasting)
- Must be adjusted to MOQ and volume discounts
- Sensitive to real holding costs
How CRMconnect helps
CRMconnect combines EOQ with the supplier MOQ, volume discounts and demand forecast, proposing realistic order quantities, not just theoretical ones.
Πραγματικό παράδειγμα
With annual demand of 12,000 units, €45/order cost and €3/unit/year holding cost, EOQ ≈ 600 units. CRMconnect adjusts to the supplier MOQ of 500 and proposes 600 to also catch the volume discount.
Ενημέρωση:
Συχνές ερωτήσεις
Is EOQ still relevant today?+
Yes, as a cost-balance principle (ordering vs holding), but it must be combined with forecast, MOQ and discounts, not applied in isolation with assumed constant demand.
How does EOQ relate to reorder point?+
ROP says WHEN you order; EOQ says HOW MUCH you order. Together they form each SKU's replenishment policy.
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Σχετικοί όροι
Reorder Point (ROP)
The stock level at which a new order must be placed to avoid a stockout before goods arrive.
ΛειτουργίεςLead time
The total time between placing a replenishment order and the goods becoming actually available for sale.
LogisticsInventory turnover
How many times stock is fully sold and replenished in a period - a measure of capital efficiency.
ΟικονομικάWorking capital
The difference between current assets and current liabilities - the cash a company has to fund daily operations. A key financial-health indicator.