课程: Excel Supply Chain Analysis: Solving Procurement Problems

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Calculate economic order quantity

Calculate economic order quantity

课程: Excel Supply Chain Analysis: Solving Procurement Problems

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Calculate economic order quantity

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- [Instructor] EOQ, or the economic order quantity, is a crucial inventory management tool that helps companies like Kinetico determine the optimal order quantity to minimize both their ordering and holding costs. Let's dive into the steps. To calculate EOQ, you'll need three key pieces of information. Your demand; the total number of units that are required during the year. Our ordering cost, which is the fixed cost incurred every time an order is placed. And our holding cost; the cost to hold one unit of inventory for the year. If you've downloaded the exercise files, look for 02_02 EOQ. Otherwise, you can set up this Excel spreadsheet on your own. Now we'll use the EOQ formula, which is EOQ is equal to the square root of two times the demand times the ordering cost divided by the holding cost. In Excel, we calculate it as follows. Click on cell B4 where we want the EOQ result to appear. Enter the formula =SQRT for square root, open parentheses, and we need two of those. 2 times B1…

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