Economic Order Quantity (EOQ) in Inventory Management
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- Опубліковано 28 сер 2024
- This video discusses the benefits of an Economic Order Quantity (EOQ) and how to calculate an EOQ. It also explains how & when to use an Economic Order Quantity formula and then gives examples from the Pearson textbook on how to calculate it. Problems taken from the Pearson Textbook "Operations Management, Sustainability and Supply Chain" 13th edition by Jay Heizer, Barry Render and Chuck Munson. Chapter 12 on Inventory Management.
At www.operationsuniversity.org you can get Free copies of this Slide Deck and other Chapter Outlines. Practice Problems & Homework Support (step by step guides how to complete the quantitative questions + MS Excel templates) are available for a small fee.
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Thank you sooooo much I am so worried about OM but your videos have been really helpful. I truly respect professors like you who teach students and enable learning. I wish you so much good, I hope both sides of your pillow is cold, that you find a 100$ on the ground, just overall good things!!!!
Hi Sara, happy to help! Thank you for watching my videos. And I hope I find $100 on the ground too :)
I was able to learn a lot about inventory managementwith your videos. Thank you!!!
Wonderful, you are welcome. Glad I could help!
This is the most helpful video on EOQ. Thank you!
Glad you think so! Thanks for the feedback, I appreciate it!
I found this video very helpful. I watched it twice ahead of my lectures and I really got my lecturer very well the moment he started the class.
Wonderful! I’m glad the video was helpful for you!
My first time in the class 🎉 Thanks you so much my Professor.
You're very welcome Natenin! Thanks for watching my video's!
Thank you very much, the last 2 examples made it very easy to understand.
You are welcome! I'm glad the examples were helpful. More examples will be posted soon.
The entire series is very helpful! Thank you
Great! I'm glad you like them! Thanks for the feedback.
Best video of EOQ explanation. Thankyou
Wonderful. You are welcome! Glad it was helpful.
Your teaching is so helpful. Thank you so very much.
Hi Kehinde, thank you for the positive feedback! I am glad you find the videos helpful. Thanks for watching!
@@OperationsAndSupplyChain
Hello,
I would like to know if you give hands on training on the inventory mgt system software and the warehouse management systems.
I will be expecting your response.
Thank you,
Kehinde.
Hi Kehinde, if you become a Premium member of the Operations & Supply Chain University UA-cam channel then you will receive 1 hour per week of hands on virtual office hours by Zoom. During those sessions we can discuss some inventory management systems and processes, but I do not have access to many of the "software" systems that are on the market & available for supply chain & operations professionals.
Thank you so much for sharing such an awesome information.
Hi Qingqiong, thanks for the feedback. I'm glad you found the information useful!
Excellent presentation ❤❤❤❤
Thanks Enkelejda, I'm glad you found it useful!
very informative and explained very beautifully...Thank you
Great, thank you for the kind feedback! I appreciate it, and I'm glad it was helpful for you. Take care!
A wonderful explanation. I study in India and I found it difficult to understand this material due to my weakness in the English language, but you are wonderful...
Hi Muhyiddin, thank you for the feedback! I'm glad you found the video useful.
Extremely detailed. Step by step. Help me with my classes a kot
Hello Nhu, thanks for the feedback on this video! I am glad this was able to help you with your class. Take care!
Thank you so much !! Life saving video 🤓
Wonderful! You are welcome! Glad I could help.
very nice explanation and easy understanding
Thank you for the feedback! Glad it was helpful for you.
for expected time between orders, why we did not take 365, orders from weekend gets piled up
Hi Kevin, thanks for the question. We only take the working days into consideration (not all 365 days), because there will be no bottleneck of orders from the weekend, if they do not work on the weekends. You only use the working days per year for the calculation.
How can I understand how to manually calculate holding costs? I’d like some more info on this if possible!
Great video! Thank you! 🙏🏼
Hi Chris, in the university course I teach I always provide the holding cost (or communicate what percentage it is of the item's purchase price). If you were using this in a non-university setting, you would have to manually calculate holding cost. There are multiple ways to calculate the holding cost, and each organization may do it differently. In general, holding cost is the sum of all carrying costs (storage costs, employee salaries, service costs, insurance, taxes, obsolete inventory, and shrinkage). After you have all of the holding costs (as determined by your organization), then you divide that by the total value of annual inventory. Multiply it by 100% and that is your holding cost percentage. I hope that helps!
Why we use number 2 in dividends and multiply?
Hi Emad, thanks for the question. We use the number 2 in the EOQ formula because it helps us to calculate the "average" inventory (Q/2). If we order 100 pcs at a time (Q=100) and let the inventory drop to zero (0) then the average on hand inventory is 100/2 = 50 pcs. Thanks for watching our videos!
in the total annual cost in part d last question of the video, total annual cost don't u have tp also incorporate the cost of purchasing the items (65*131 quantity)?
Good question. The last example provides the purchase cost per unit because the holding cost (H) is calculated as a percentage of the purchase price. There are three main inventory models for independent demand; EOQ, EPQ/POQ, and the Quantity Discount Model. The Quantity Discount Model takes the purchase price into consideration, so then you would revise your order quantity and buy Q, not the EOQ (Q*). Please see that video for an explanation of how to incorporate the item unit cost into the purchase quantity decision.
Hello, if i am told the business has a daily demand of 35 and that they operate or work for 252 days out of the year wha is the total demand for the year?
Hi Na, I'm not sure if your trying to throw me a curve ball question here, but the annual demand in your scenario would be daily demand of 35 x 252 working days = 8,820 annual demand?
thank you, i wish there was an excel templete that came with this
Greetings! I'm glad you asked! Microsoft Excel templates to help with these lecture recording calculations and the MyLab Homework assignments are in development, and will be posted on www.OperationsUniversity.Org within the next few weeks!