EOQ (Economic Order
Quantity) :– EOQ is that quantity of ordering materials for
which the organization has to bear optimum amount of cost for ordering and
carrying materials.
Formula
for calculating EOQ:-
EOQ
=
√2AO/C
Where,
A = Annual usage units
O = Ordering cost per unit
C = Annual
carrying cost of one unit
i.e. Carrying cast % *
Carrying cost of unit
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