Inventory Parameters
units/year
$/order
$/unit/year
Cost Equilibrium Gauge
Ordering / Holding ratio--
Ordering >> HoldingBalanced (EOQ)Holding >> Ordering
Awaiting Input
Optimal Policy
Economic Order Quantity (Q*)
--units
Total Annual Cost (TC)
--$/year
Orders per Year (N)
--orders/year
Cycle Time (T)
--days
EOQ Formulas
Q* = √(2·D·S / H)
TC(Q) = (D/Q)·S + (Q/2)·H
Orders per year: N = D / Q*
Cycle time: T = 365 / N (days) or 52 / N (weeks)
At EOQ: ordering cost = holding cost
Cost Curves (Ordering, Holding, Total)
Sensitivity: TC / TC* vs Q / Q*