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Economic order quantity
Find the order size that balances ordering cost against holding cost.
Operations & supply chainHow it's worked out
- EOQ = √(2 × demand × order cost ÷ holding cost per unit)
- Steady demand, no quantity discounts, instant replenishment
NoteThe total cost curve is flat near the optimum, so rounding to pack or pallet sizes costs little.
Source: Harris (1913) economic order quantity; APICS CPIM body of knowledge
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