FURTHER NOTES

Cards (12)

ASSUMPTIONS ON ECONOMIC ORDER QUANTITY
Demand is constant
Lead Time is constant
Ordering Cost is constant
Carrying Cost is constant
Economic Order Quantity was introduced in 1913 by Ford W. Harris
Purpose of EOQ
To derminte the quantity to be ordered
"WHEN"
Only order at the Reorder Point
Reorder point = Lead time x Daily Usage
Modified
Reorder point = Lead time x Daily Usage + Safety Stock
TO GET NORMAL LEAD TIME
Max Lead Time - Minimum Lead Time x Usage
To Get Maximum Lead Time
Reorder Point / Daily Usage
To get Buffer Days
Maximum Lead Time - Normal Lead Time
To get Safety Stock
Buffer Days x Daily usage
Use Annual Demand if Daily Usage/Sales is not given
365 Days for International Problems
369 Days for USA Problems
CARRYING AND ORDERING COST MUST BE EQUAL