EOQ (Economic Order Quantity) - Supply Chain in 3 minutes

[@stixandpix]

EOQ does have uses, but it should not be used without thinking through the assumptions. EOQ is still important in 3 ways: 1) Understanding the fixed element of the ordering cost. 2) Understanding the variable element of the inventory holding cost. 3) The form of the optimal policy: order the same amount when inventory reaches 0. 3 is interesting not because demand is constant, but because demand is stationary. If you observe the same future, you should make the same decision. This also allows us to introduce the concept of a reorder point. EOQ is a useful model to build intuition about these tradeoffs and provides a decision framework.

[@1966lavc]

Very helpful ❤

[@KristieAllen-h2e]

Brown Matthew Wilson Eric Moore Jose

[@DullesMignon]

Martinez Robert Robinson Richard Miller David

[@AktarFardose]

Johnson Linda Harris Christopher Lopez Dorothy