Economic order quantity model (EOQ) solved problems

Effective inventory management is essential for most businesses' successful operations and supply chains. This is because inventory management impacts operations, marketing, and finance. Poor inventory management hampers operations diminish customer satisfaction, and increases operating costs.
Here we will learn the inventory ordering policies.
Inventory ordering policies address the two basic issues of inventory management, which are how much to order and when to order.
A number of models are described that are used for these issues.
Inventory that is intended to meet expected demand is known as cycle stock, while inventory that is held to reduce the probability of experiencing a stockout (i.e., running out of stock) due to demand and/or lead time variability is known as safety stock.
The discussion begins with the issue of how much to order.
The question of how much to order can be determined by using an economic order quantity (or EOQ) model. E O Q models identify the optimal order quantity by minimizing the sum of certain annual costs that vary with order size and order frequency. Three order size models are described here:
The basic economic order quantity model.
The economic production quantity model.
The quantity discount model.
This video presents some solved examples as an application of the basic economic order quantity model (EOQ model).

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