EOQ

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author

Posts
June 9, 2016 at 9:32 pm #321766
sxhawty
Member
- Topics: 56
- Replies: 25
A company uses the Economic Order Quantity (EOQ) model and holds no buffer inventory. Its annual cost of holding one unit in inventory has decreased.

EOQ – increase? decrease? or no effect?
Total Annual cost of placing orders? – increase? decrease? or no effect?
June 10, 2016 at 6:16 am #321825
John Moffat
Keymaster
- Topics: 57
- Replies: 54857
Look at the formula, and put some figures in if it helps/

If holding cost decreases then EOQ increases.

If EOQ increases then fewer orders are needed so annual cost of placing orders decreases.
Author

Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.