Calculating economic order quantity (EOQ)

Calculate the EOQ for a store to determine the most efficient quantity to order for inventory items. EOQ represents the ideal balance between ordering costs and inventory holding costs for items being demanded annually at a constant rate. EOQ helps manage inventory by minimizing order costs and holding costs for each item.

To calculate EOQ:

  1. Open the Calculate EOQ form.
  2. Organization—Enter the organization for which to calculate EOQ if you use multi-organization security.
  3. Date From—Enter the date of the item’s first analysis.
  4. Date To—Enter the date of the item’s last analysis.
  5. Store—Enter the store for which to calculate EOQ.
  6. Part—Enter the part for which to calculate EOQ.
  7. Stock Class—Enter the class of the stock for which to calculate EOQ.
  8. ABC Class—Select the class of the stock (A, B, or C) for which to calculate EOQ.
  9. Choose one of the following options:
    • % of Average Price—Select to calculate EOQ with a percentage of average price. Skip step 11.
      Note: The system uses this equation to calculate EOQ based upon % of Average Price.

      Holding Cost % is required.

      EOQ=

    • Fixed Value—Select to calculate EOQ with a fixed value. Skip step 10.
      Note: The system uses this equation to calculate EOQ based upon Fixed Value.

      Holding Cost is required.

      EOQ =

  10. Holding Cost %—Enter the cost for the holding percentage.
  11. Holding Cost—Enter the holding cost.
  12. Fixed Order Cost—Enter the fixed order cost.
  13. Print Calculated EOQ—Select to print the EOQ report.
  14. Click Process.
  15. Select each store for which to update the order quantity.
  16. Click Update Order Qty. The system updates the order quantity on the Stores page of the Parts form for each selected parts record with the value in New Order Qty.