Economic Order Quantity (EOQ) | Explained With Example

In this lesson, we explain what Economic Order Quantity (EOQ) is and why it is calculated. We go through the EOQ formula with the help of an example. We also explain the total carrying value formula and the total restocking costs formula. We go through the re-order levels in units formula, safety stock, and re-order point. Check it out.
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[@sylviasimasiku2603]

may God bless you sir. life saver 100%

[@soundersofthetrumpet8389]

you dont know how much your work helps us, we appreciate you and may the good Lord bless you. your content is clear and you explain perfectly, thank you.

[@edwardmupenda3080]

I watched this hours before my exam and understood better than my professor ever explained

[@gauravchinchole3499]

Thank you so much, most of the people just explain the eoq part no one explains about the reorder point

[@fayersa]

This was explained in a simple to understand manner. Thank you so much!

[@ferdinandsamuels9082]

Thank you!
just a recap for those who miss it
when its given in weekly sales x51
when its given in monthly sales x12

[@dr.wezisunkutumd8745]

This is making a lot of sense. U are the man! I salute!

[@MR-su7de]

Clear and helpful explanation. Thank you.

[@nicoshirima]

this helps me a lot

[@briannachantelle9271]

my exam is tomorrow and i know this would be of great help.Thank you sir

[@lisabellapato]

The example is very simple and direct forward, however in exams they set tough ones

[@cfaraja2007]

Thanks for sharing. Its a good simplified version

[@msizimbatha5784]

Awesomeness thanks 🎉

[@user-xe8ot9tw2j]

easy to follow through, thank you

[@Joker-ke9cl]

THANK YOU FOR UR VIDEO KNOW I CAN PASS MY EXAM

[@lethu_thabiso]

Thank you very much bro you helped me a lot!!!

[@aileenvillaceran1283]

Pls help
Determine the most economical quality to be stock for each product that a manufacturing company has in its inventory. This quantity, called economic order quality(EOQ) is calculated as follows:

EOQ = 2RS
I
Where:
R = total yearly production requirement
S = set up cost per order
I = inventory carrying cost per unit

[@kabbashirley2607]

My brother what is alarm stock, the question was translated from french like: calculate the alarm stock.

[@amandapaidamoyonyahanana4389]

Well explained

[@JitenderKumar-pg4xe]

fantastic .. thanks

[@mathewlokwiang8114]

Thank you so much sir, , , i got something

[@ongisadamane2346]

good work brother

[@sindyteke4533]

Thank you for your lesson 🙂 I was blank.

[@yusufhamza7573]

THANK YOU SO MUCH

[@zaneleanastasiaradebe7280]

Great example!

[@lutendoeducational2429]

great example, thank you

[@ishnoorkaur1528]

Good how to find no of days after which we need to give order

[@proeverything7647]

Great video, cheers!!

[@nurshaqirah7487]

thankyiu so muchhhhhhhhh
life saver 100%

[@kathleenkaylandicho9974]

Ty it helps me a lot

[@mensoshoko7841]

thank you

[@tumeloshaps6899]

You are the best.....Thank you very much

[@tinasheruwoko9978]

Good explanation,you made clear for me

[@shingaimlambi8199]

Ouch thank you so much it has helped a lot

[@godwillkachubensi2864]

When it's given in months, hoe do they calculate it?

[@Borlartar]

How do we calculate after the formula, you just say calculate . Not complete video for me

[@raynicolemalingi9029]

Thanks great vid

[@rosekabugho6485]

Thank you, I have a QN, what are the units of EOQ?

[@meneeraubreyfavouredchauke]

Good morning sir, how do we calculate safety stock when it is not given?

[@nurhanis6833]

Thankyouu sir!

[@nurhanis6833]

Hello sir i have question, holding cost and annual holding cost. Are they differ to each other?

[@jonnokao6085]

What happens if orders placed in multiples of 300 units does that change your re-order point.

[@zae5pm]

I think his re-order point is wrong

[@johnkchishimba9851]

EOQ Example 2
Kensi Paper mills company purchases a component directly from the supplier. The
company is operated at a constant rate and will require 1200 components per month
throughout the year. Assume ordering costs are K25 per order, unit cost is K2 per
component, and annual holding costs are charged at 20 percent. The company operates
240 days per year, and the lead time is 5 days.
a. Recommend the number of components the company should be ordering every time
they are replenishing stock?
b. Compute the total annual inventory holding and ordering costs.
c. Compute the reorder point.
d. Derive the inventory policy of this company
e. Suppose that the company's management likes the operational efficiency of ordering in
quantities of 1200 units and ordering once each month.
i. How much more expensive would this policy be than the one you recommended in
(a) above?
ii. What would the reorder point be if the 1200-unit quantity were acceptable?
f. Why should the company hold this inventory?
g. What costs do the company incur for holding this inventory?

[@Mammadorujovsz-x7k]

Brown Jason Davis Robert Hernandez Matthew

[@melartte655]

I need assistance on this! Where do I enquire?

[@Counttuts]

Good day, our contact details are available in our description above.

[@oorishawo]

You said C is equql to 20% of P which is 0.02*3. Then you left P out of the denominator calculation. C *P. You only calculated C

[@GreenAnsel]

Clark Larry Martin Kenneth Rodriguez Barbara

[@hwangjeongin1387]

Hi! Just to clarify,
1. Utility bills are under what part of cost? Ordering or carrying?
2. If the ordering cost increases, EOQ also increases, right?

[@momojr7023]

please help
Demand is 5,000 units per year. Ordering cost is N100 per order and the basic unit price is N5. Carrying cost are 20% per annual. Discounts are available thus:
1,200 - 1,399 Less 10%
1,400 - 1,499 Less 15%
1,500 and over Less 20%
What is the most economical quantity to order?

[@Counttuts]

Good day, due to the volume of requests for help regarding student specific questions, we are not able to address them on this platform. However, you can request a session at reasonable rates with us at [e-mail] to address your challenges with the subject.

[@Sarajanu-w2g]

Anderson Timothy Wilson Kimberly Moore Angela

[@DonkpApmhp-n7p]

Taylor Daniel Lee Carol Jackson Maria

[@julianangongnikuetezang3634]

please increase your volume in the next video as it sounds as though you are whispering.

[@lilieslivley9829]

how to find safety stock if the question doesn't give the amount 🥲

[@ChaplinBrady]

Walker Thomas Harris Edward Anderson Carol