EOQ Economic Order Quantity formula and explanation
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- Опубліковано 28 сер 2024
- This video explains the concept behind economic order quantity (EOQ) and uses the formula to solve an example problem.
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You were the key for my survival when I was in college sir, especially in Cost Accounting. Thank you so much for your videos
❤ thanks for the compliment
@@abdifatahabdalla2909 lol who r u
@@karangill7189 i don't get you. Speak up !! Man
@@abdifatahabdalla2909warya 😭😭😭
Edspira is like a Khan academy for business and accounting. Thank you Michael - you created and continue to create a robust and thorough FREE resource. Advanced concepts explained and demonstrated simply.
True!
I just went through an entire year of lectures with your videos, you're saving my life right now. If I pass my resit, you'll be my hero!
Happy to help! I hope you kick butt on the exam!!
I'm having an exam tomorrow and I was just stuck on the EOQ chapter, but not anymore thanks to this video. Thank you very much kind sir. You have helped me tremendously.
I just love the way you elaborated all that stuff .... u made my day ,,,, well, u made my night actually because tomorrow morning is my first exam of accounting and I am here to learn SOMETHING !!!
Happy to help! I hope you did excellent on your exam!!
mine too... I have to present a seminar on inventory control tomorrow and this helped me a lot... keep up the good work buddy
Thank you for this video. It is the most clear and concise explanation and example of EOQ I have found on the internet. Thanks for helping me pass my mid-term.
+77mardi It's my pleasure. Congratulations on passing your test!
you’ve gotten me through accounting, finance, and operations. thank you man!
Operations is the worst.
Thank you! The EOQ process is so wordy and confusing...having this visual REALLY helped!
Good work but u could have shown where that sqrt comes from as well. (i mean how to derive EOQ model) It would be much better video then.
Ordering Cost = Carrying Cost
(Annual Demand/Ordering Quantity)*Ordering cost per order = Number of units to carry * Carrying Cost per unit
(D/Q) * S = (Q/2) * H
Multiply each side of the equation by 2
(2*D*S) / Q = Q * H
Q^2 = (2 * D * S) / H
Q = SQRT [ (2*D*S) / H ]
Studying for APICS and your explanation was so much better than those books, thanks!!
Awesome...thanks for watching!
Thank god for this. My professor makes no sense talking about it and you make it seem so much more simple
Thankyou so much! Tomorrow is my Supply chain and logistics exam exam and you Sir have helped me alot.
Ps: your voice is really calming to my ears. God bless you.
You have always been such an awesome teacher and have such a great sense of humor too., have my finals in Operations management in 2 days , this really helps
If you don't want to have to listen to everything that doesn't matter with the math of this problem skip to the 7 minute mark
Very good! Simple and understandable. The way teaching should be. Thank you.
It is good to have explainers like you, Respect!
Thank you so much!!!!! I finish my exam thanks to your video!!!!
Everything made simple, helped me pass easily what I though was difficult. Thanksgiving again
No problem. I'm glad you liked the video!
This video was informative. However, if the demand for a year of Chocolate milk is 200 then you shouldn't order 100 at a time as they will spoil with the 6 months before you order more.
Thank you so much, your videos always save me when I can't understand my prof.
thank you sir! this will really help me with my CPA board exam :D
No problem. Good luck with the CPA!
Great explanation and video! Thank you! You explained it so much better than my accounting book!
Thanks!
currently cramming for an exam and this video had me cracking up multiple times. thank you for sharing. "kids aren't big wine drinkers" lolllll
The erasing of R and making it look worse is the best hahaha... You made my day
in my practical exercises I needed to know how often we need to place that order, not only the quantity, either every week, biweekly, or monthly
You have a solid way at explaining these concepts, really helped .
Funny af yet effective. Wish u were my lecturer
In a word
" Beautiful "
Thank yo so much !
the way he fixes the R is the way I fix my life right now making it worst hahahhaa thanks for the videos I've been relying on and it's so helpful and easy to understand.
Thank you so much sir, it helps me a lot on my Business Decision Making class.
semester saved. thank you!
Thanks for the Video , It was helpful.
I'm finding on some websites, that in the formula for EOQ ( Q * ), the 2*R*D is actually divided over h*C, where C is cost of the product. why are you not considering C here ?
Entertaining and funny. Glad that i have found your channel
Thank you so much! You made it very clear to me.
No problem-- good luck with your class!
You are amazing!
Thanks Rushali Sharma!
Finally I got it :D
Thank you so much
+Omar Rabee No problem!
So the optimal number is 100 units to be requested annually instead of 200 demanded units per year? Or to this indicates that we can request 2 times per year?
It was very helpful. There is a question. Why do we multiple the R and D by 2 and why we divide it by H?
Thanks lots for helping me, your video helped me lots
Great explanation, just from a critical thinking point, I would not recommend ordering chocolate milk twice a year as it will spoil 😉
You explain very well,thank you.
THIS HELPS A LOT!!!!!!!!!! THANK YOU
Thank you dr. It helps me so much
Thanks for the elaboration
For some reason my formula is Q*= 2*P(ordering cost)*D(annual demand) / C (carrying cost as a percentage of value or cost) * V (average value or cost of 1 unit of inventory).... Which is basically the same formula you have in your video, but you're missing what seems to be a key piece (carrying cost) in your formula for Q*. Can you explain this? Also, what wasn't mentioned was that EOQ cannot be a fraction or decimal. I realize in your example Q* was a whole number, but that fact was omitted in your discussion of EOQ.
well understood
Thanks for helping us out.Sir ,can you tell me which tool you used for making this video.I want to share something too with the society.
thank you sir, it was really helpful, btw that "R" though lol
MetallicRevengeance No problem-- hope you do great in your course!
Education Unlocked i will
Pardon my ignorance: But I have a question. If we know annual demand, and if we assume monthly demands (or say we know months in which demands is higher), why can't we directly say that monthly or annually the Optimal Order Size is just that fulfills that Demand? 🤔
If i understood it correctly the H is anyways a cost that's proportional to D I suppose?
Is the Ordering Cost R per unit or it is per order a fixed cost in these applications of EOQ? 🤔
Optimal Order size can be just equal to or close to the D of the month? 🤔
Thanks for this! You made this really easy to understand!
Thank you! I finally understand this!
Could you talk about the the total relevant ordering cost and total relevant carrying cost. How come at EOQ, those two are equal?
awesome video to explain things!
Your formula os straight forward but how do you realistically calculate carrying cost
Nice, thanks for the video sir :D
Glad I could help-- best wishes!
Super Like ... Thank You
Please I got a question. Why is that "two" inserted in the formula ?
I have an Inclass test tomorrow. Sufficient now
thank you very much i have benefited a lot
material purchasing cost is not added in holding cost?
Thank you.. Really helpful 😇
Thank you so much sir! Your videos are so helpful :D
You can choose for one of the above gifts
What if the H=0? I men there are no carrying costs...how do I estimate?
what about accounting for cost of stockout in other words accounting for uncertainty of demand?
The answer is actually 50 not 100 because you never divded the total by the holding cost. 100/2= 50
hellooo, i have question what about the life of the chocolate milk? i dont think you can buy 100 chocolate milk for 6 months in 1 shot before they go bad, how does that work?
Thank you so much!!!
For internal deliveries between warehouse and outlets, does this formula still apply?
How can your optimal order be 100 when you’d only be ordering every 6 months? Fine for a non perishable but milk after 6 months? Am I missing something?
great work
Why square root and 2 used in this formula plz explain.
This is helpful
Greetings sir🙏🙏 what is percentage change in the EOQ when the demand is increased by 25%? Is there any formula to calculate this??
Greetings sir🙏🙏all else equal, a firm that holds safety stock of inventory will have a lower level of average inventory than firm that doesnot. Is it true or false?? Please provide me answer with reason sir🙏🙏Plz reply sir🙏🙏
I think the R it's not well explained, the cost of each chocolate milk it's not considered?
So is it 2.50 - 200 im confused
From where do u know the carrying cost?
The carrying cost would be calculated by the restaurant. They could take the rent, and allocate a portion based on square footage of the refridgerator space. They could also estimate how much electricity the refridgerators use. There are many different ways that the restaurant could estimate carrying cost, but it is ultimately up to the restaurant to determine what method they think is best.
I've my presentation based on eoq in pharmaceutical management and problems related to it.
Could you please help me?
It'd be a great help.
what do you use to create this video i.e. software and hardware?
Thank you.:)
No problem! Good luck with your course :)
because everyone knows chocolate milk will last 6 months... spoilage/life-span should be a variable in this equation.
good vid, but why not make the ordering cost an O and H the holding cost
Good idea but didn't think of it. To be honest I always look back at the videos and kick myself about how I could have done this or that better. It's probably the number one reason I haven't produced more videos-- I'm a little too critical of myself, which makes the video production process stressful.
What program do you use, sir?
I use Camtasia and SmoothDraw
the sound is not good I am quite disappointed
Amazing job sir.. I laughed when ur R was terrible and u made it worse. THank you! :)
+Pir Arkam No problem!
Pir Arkam I laughed too when I saw your profile picture..dumb face.
why do people have to be so mean?
fucking amazing !!! Very helpful ... Much better than my instructor zzzz!!.
when will you order the 100 units?
+Camz D. Reorder point calculation.
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I'm Commerce Major in Management Graduate Sir.♥️💙💛💚💕✌️👍🌞🎗️🇵🇭🅾️
Rodriguez Linda Jones Kevin Taylor Robert
Get to the point already. It isn't necessary to get a million examples about chocolate milk and what not prior to learning the application of the equation.
Lee Brian Rodriguez Frank Lopez Helen
Davis Elizabeth Jackson Kimberly Martinez Paul
Smith William Hall Helen Moore Cynthia
Thompson Sharon Jones Kenneth Miller Michelle
thank you man i love you
No problem!
the sound is not good I am quite disappointed