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. Select Materials > Process > Calculate EOQ.
  2. Specify this information:
    Organization
    Specify the organization for which to calculate EOQ if you use multi-organization security.
    Date From
    Specify the date of the item’s first analysis.
    Date To
    Specify the date of the item’s last analysis.
    Store
    Specify the store for which to calculate EOQ.
    Part
    Specify the part for which to calculate EOQ.
    Stock Class
    Specify the class of the stock for which to calculate EOQ.
    ABC Class
    Select the class of the stock (A, B, or C) for which to calculate EOQ.
  3. Choose one of these options:
    Option Description
    % 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 =

  4. Specify the following:
    Holding Cost %
    Specify the cost for the holding percentage.
    Holding Cost
    Specify the holding cost.
    Fixed Order Cost
    Specify the fixed order cost.
    Print Calculated EOQ
    Select to print the EOQ report.
  5. Click Process.
  6. Select each store for which to update the order quantity.
  7. 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.