Interactive Management Science

EOQ Analysis The EOQ Analysis implemented here is based on the basic EOQ model. This model used to identify the order size that will minimize the sum of the annual costs of holding inventory (HC) and ordering cost (OC), excluding the acquisition cost. Users can change each parameter to see the effect. You may need to install the latest Java Runtime Environment to run this module.

Q: Order quantity each time an order is placed Q0: Optimal order quantity K: Fixed cost associated with placing each order (excludes the acquisition cost) h: Annual holding cost per unit held D: Annual demand rate TC: The total-cost curve is U-shaped. TC=Q*h/2+D*K/Q TC0: Annual total cost when using the optimal order quantity Q0. HC: Annual holding costs are linearly related to order size. HC=Q*h/2 OC: Annual ordering costs because of K are inversely and nonlinearly related to order size. OC=D*K/Q Press Reset to start over.