Economic Order Quantity (EOQ) Model

Inventory management is an essential part of every business. With an effective system in place, the business can significantly reduce its various costs such as warehousing cost, inventory carrying cost, ordering costs, cost of obsolescence, and so on. It improves the supply chain of the business.

Managers are able to forecast the level of production at which they need to place new orders for inventory. Therefore, organizations should take all the necessary steps to maintain an adequate inventory management and control system.

One of the Effective Inventory Management Techniques is: Economic Order Quantity (EOQ) Model. 

Economic Order Quantity technique focuses on deciding how much inventory the company should order at any point in time and when they should place the order. In this model, the manager will reorder the inventory when it reaches the reordering level. EOQ model helps to save the ordering cost and carrying costs incurred while placing the order. With the EOQ model, the organization is able to place the right quantity of inventory.

Did I miss something?

What do you think?

#Inventory #Supplychain