Explain EOQ?

Question

Explain EOQ?

Accepted Answer

EOQ stands for Economic Order Quantity and is a formula used to determine the optimal order quantity for a product.

EOQ helps to balance the costs of ordering and holding inventory.
The formula takes into account the demand for the product, the cost of placing an order, and the cost of holding inventory.
The goal is to find the order quantity that minimizes total inventory costs.
For example, if a company sells 1,000 units of a product per year, the cost to place an order is $50, and the cost to hold one unit in inventory for a year is $10, the EOQ would be approximately 141 units.
EOQ is often used in supply chain management and inventory control to optimize ordering and reduce costs.

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