Economic Order Quantity (EOQ) – Definition and Formula
In today’s marketplace, optimization of resources, their adequate use, and cost reduction are the key attributes of a successfully developing company capable of competing effectively. For the qualitative analysis of available resources and the possibility of their optimal use in business practice, there is a large number of methods and models used depending on specific tasks. One of them is Economic Order Quantity (EOQ), which is a model used to determine the optimal quantity of goods or materials to be ordered at a given time in order to minimize the total cost of inventory. The point of minimizing inventory is to save costs since unsold goods take up space, to reduce risks since inventories can become obsolete or physically obsolete, which is especially true in the food industry, and to increase efficiency since excessive inventory can make it difficult to account for them. Thus, EOQ seeks to eliminate situations in Continue reading