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- 1. Name Roll no. Divya Dadheech……………… Divya Ranamt………………… Ekta Manik……………………. Rutuja …………………………….. Poulami Sarkar……………… Rushabh Chandan………… 14 16 17 19 20 24
- 2. EOQ Model
- 3. INTRODUCTION OF EOQ DEFINITION OF EOQ
- 4. Uniform/Constant Demand Constant Unit Price Constant Carrying Cost Constant Ordering Cost Instant Delivery Availability of Funds
- 5. How much inventory should we order each month? The EOQ tool can be used to model the amount of inventory that we should order each month.
- 6. Batch costing
- 7. • Proper Co-ordination • Centralized Purchasing • Proper Scheduling • Proper Classification • Use of Standard Forms • Safe Storage • Reduce Cost
- 8. How EOQ Works ? The Principles Behind EOQ: The Total Cost Curve &
- 9. The Principles Behind EOQ: The Holding Costs Keeping inventory on hand Interest Insurance Taxes Theft Obsolescence Storage Costs
- 10. Interest……………. Obsolescence…….. Storage……………..
- 11. The Principles Behind EOQ: The Procurement Costs Primarily the labor costs associated with processing the order: Ordering and requisition A portion of the freight if the amount very according to the size of the order Receiving, inspecting, stocking Invoice processing
- 12. Total Cost = Purchase Cost + Order Cost + Holding Cost The Total Cost Formula
- 13. The Total Cost Formula This represents the unchanging fixed costs P = Purchase cost per unit R = Forecasted monthly usage
- 14. The Total Cost Formula This represents the variable order costs P = Purchase cost per unit R = Forecasted monthly usage C = Cost per order event (not per unit) Q = The number of units ordered
- 15. The Total Cost Formula This represents the variable holding costsP = Purchase cost per unit R = Forecasted monthly usage C = Cost per order event (not per unit) Q = The number of units ordered F = Holding cost factor
- 16. The EOQ Formula Taking the derivative of both sides of the equation and setting equal to zero to find the minimum value of the function, one obtains:
- 17. The EOQ Formula The result of differentiation The Economic Order Quantity
- 18. Tabular Method Graphical Method Algebraic Method
- 19. First, Recall the EOQ Equation: P = Purchase cost per unit R = Forecasted monthly usage C = Cost per order event (not per unit) F = Holding cost factor
- 20. R = 5200 C = $10 per order P = $2 F = 20% of value of inventory per year
- 21. R = 5200 C = $10 per order P = $2 F = 20% of value of inventory per year (10)2 (5200) (2 )(.20)
- 22. EOQ = 510 cases
- 23. EOQ is a tool, not a simple solution. EOQ is useful in determining optimal order quantity Understand the equation and what you are trying to find Find accurate inputs for the equation
- 24. Fundamentals of Cost Accounting Vipul Prakasharan http://www.inventoryops.com/economic_or der_quantity.htm http://en.wikipedia.org/wiki/Economic_ord er_quantity Cost Accounting - V.K.Saxene

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