Define Economic Order Quantity (EOQ) ?

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## nadeem

The optimal order amount for a firm to acquire to reduce inventory expenses such as holding charges, shortfall costs, and order fees is the economic order quantity (EOQ).

The formula for calculating inventory stocking levels is called Economic Order Quantity. Its major goal is to assist a firm in maintaining a steady inventory level while also lowering expenditures. Variable yearly usage amount, order cost, and warehouse carrying cost are all used in EOQ.

Formula for EOQ is = Square root of (2 x D x S/H) or √ (2DS / H).

Where D is Demand in Units.

S = Order Cost ( per purchase order )

H = Holding Cost ( per unit, per year )