Economic Order Quantity (EOQ)

Illustration of Economic Order Quantity (EOQ)

What is Economic Order Quantity (EOQ)?

EOQ is a formula used to determine the ideal order quantity that minimizes total inventory costs—ordering and holding costs combined.

Formula

EOQ = √(2DS/H), where D is demand, S is ordering cost, and H is holding cost per unit.

Sources: Wikipedia, CFI, Investopedia

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