jani basha

 Profile Answers by jani basha 

• Dec 3rd, 2008

 

EOQ MEANS ECONOMIC ORDER QUANTITY

EOQ=root of 2ao c

a= means annual demand
o= order quantity
c= carring cost per unite per annum

Through this formula you can find the economic order quantity

Economic order quantity is very help full to management in purchase of goods
because some time bulk order is given by purchasing department on that time
purchasing amount high so interest lost is accrued next good are stocked in
goodems so carring cost is incurred high and vice versa on low quantity goods
ordered

so when will we purchase or ordered goods, on the basis of equanamic order
quantity goods ordered is best for cost reduction relating to interest on price
and carring cost and ordering cost