Economic Order Quantity (EOQ)

Definition

In fixed order quantity systems, it is defined as the size of an order that minimizes the total inventory cost, under a given set of circumstances, obtained by trade off analysis between the cost of placing an order and the cost of holding stock EOQ= sqrt [(2*U*S)/(I*C)] Where U= annual usage S= ordering or set-up cost I= inventory holding cost C= unit cost

Formula

Tags

inventory, cost, order, analysis

Metadata

Category: Inventory · Added: May 17, 2026