Glossary
Economic order quantity
It is the quantity to order each time so that ordering cost plus holding cost is as low as possible.
What it means for a shop owner
If you order little, orders and their cost multiply, and if you order a lot, storage costs you. The formula gives a rough figure, not a fixed rule. Adjust it to the supplier's minimum.
A worked example
Yearly demand is 1200, an order costs 20 and holding one piece costs 3, so the quantity is about 126.
Related
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes