[charissatan]

When deriving the economic order quantity (EOD), there is an assumption that was used, namely that the average inventory is always half of the reorder quantity
(see : https://en.wikipedia.org/wiki/Economic_order_quantity#The_Total_Cost_function_and_derivation_of_EOQ_formula )

Hence, the reason why we need to divide by 2 to get average inventory quantity.

[Author]

Posts