Hi
The EOQ is always calculated on a yearly basis, however, is it ever possible to amend it so that it can work over smaller periods of time i.e six months? Can the annual holding cost ever be changed to reflect a smaller time period?
Regards
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EOQ
9y ago#1Although we usually calculate the EOQ using annual demand and holding cost per annum, you can use (for example) the three month demand and the holding cost for 3 months. It makes no difference at all to the answer.
Thanks. If doing over 6 months you'd be dividing yearly d/2 and dividing your yearly holding cost by 2 at the end.
9y ago#3Yes (although I don't know why you write 'at end').
D will be the demand over six months (or the yearly demand divided by 2).
Ch will be the cost of holding one unit for 6 months (or the annual cost divided by 2).
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