How does EOQ analysis work?

Asked a year ago

Can someone help me with this please? I've been having trouble managing my stock levels lately and a friend of mine recommended giving economic order analysis a try but I'm not sure how. I run an online retail store selling small electronic goods such as mice, keyboards, headphones etc. Thanks!

Abeeha Qasmi

Thursday, March 09, 2023

Economic Order Quantity (EOQ) analysis is a useful strategy for inventory management optimization. It looks at factors such as carrying costs, ordering costs, and the demand rate to determine the ideal order size. Calculating the EOQ, businesses can minimize inventory holding costs and reduce the risk of stockouts.

To conduct a successful EOQ analysis, use this formula:

EOQ = √2 x Demand x Ordering Costs / Holding Costs

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