Economic Order Quantity
donnas1977
Registered Posts: 182 Dedicated contributor 🦉
Hey, looking for some help with Economic Order Quantity (EOC), I understand the formula ok (√2 x CO x D/Ch). Example I am working on gives weekly usage and max delivery time and also given an average time for both, would you use the average times given rather than max?
thanks
Donna
thanks
Donna
0
Comments
-
donnas1977 wrote: »Hey, looking for some help with Economic Order Quantity (EOC), I understand the formula ok (√2 x CO x D/Ch). Example I am working on gives weekly usage and max delivery time and also given an average time for both, would you use the average times given rather than max?
thanks
Donna
Lead times are not part of the EOQ calculation so ignore them, they are used for the control levels.Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
You want the annual usage. The question should tell you how many weeks in a year the business operates, but if not, I would go with 52. The bottom figure is the annual cost of holding a unit of stock. But if both the top and bottom figures are weekly, then I guess you can use that (no point in multiplying top and bottom by 52).
As an example, if the cost of placing the order is £20, the annual usage is 10,000 units, and the cost of holding a unit for a year is £0.20, the equation is: sqrt (2 x 20 x 10,000)/0.2.
Hope that helps.0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 323 NEW! Qualifications 2022
- 165 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 88 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership