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EOQ Formula with examples in Excel (Economic Order Quantity for Inventory Management)
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- čas přidán 15. 08. 2024
- Download the EOQ Excel Calculator: abcsupplychain...
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INVENTORY MANAGEMENT WORKSHOP (FREE) : abcsupplychain...
MY BLOG : abcsupplychain...
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How much and how often should I order my stock? 📦 🤷♂️
These simple questions can have dramatic consequences on the profit & cash flow of your company ⚠️ 💥 However, I can still see 2 common mistakes:
1) Underestimating the inventory & holding costs 💰: cost of money, storage, insurance, inventory gap, theft, promotion, destruction...
Buying more to optimize your purchasing price or fill your container is not always profitable in the long run 📉
2) Underestimating the transaction costs 🥵: Too many small orders, too much work, emails, follow-up, inspection, storage, payment, issues...
In this new step-by-step video tutorial, I explain:
👉 Calculate the Holding & Inventory Costs
👉 Calculate your Transaction costs per order
👉 Use the Economic Order Quantity (EOQ) formula to find the balance point ⚖️
👉 Example with NIKE shoes 👟 in EXCEL that you can download below the video :-)
👉 What are the limitations of the EOQ method
👉 How to combine EOQ with Safety Stock
👉 The action plan to start optimizing your inventory TODAY 🚀
And let me know in the comments, what you think of the EOQ method and its limitations.
Enjoy my tutorial !
Edouard Thieuleux
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Economic Order Quantity Calculation:
00:00 EOQ Introduction
00:46 Wilson formula: background
01:24 EOQ formula: meaning and definition
02:13 Demand (forecast)
02:31 Holding Costs
03:57 Transaction Costs
05:24 EOQ calculation and Order Frequency
6:45 EOQ in Excel with examples (full tutorial)
9:19 Limits of the EOQ formula
11:21 EOQ, Reorder Point and Safety Stock
12:03 EOQ for Inventory Management: Action Plan
#supplychain #inventorymanagement #eoq
i have seen so many videos but i couldn't find the head which comes under purchasing cost and holding cost even today i have learn eoq formula in excel...
i must say u r a very good teacher
Glad It could help!
A big thank you for such a brilliant video Eduardo! (I love when you put cat memes or references to the baguettes ;))
Very informative, really enjoying these videos. Thanks.
Thanks for watching, and glad you liked it! 😉
Great 🤩
good video, but this is not works for retail replenishment.
This is quality content, Please keep it up. I learn a lot from your video
Thanks 🙏
Thank You. Useful Video.
Glad it was helpful!
If you are working for a company, how to find out the hours and value for each of the transaction cost such as reception, follow up, communication etc. Same question also for the holding cost. How to find out the numbers?
Thank you very much for such a brilliant video Mr. Eduardo. I think, it would be far better also if you could attach for us the whole excel file prepared by your inventory program manager as well. If not, advise me how to attend your courses. Thanks again!
Thank you John! here is my full Inventory Mangement program: abcsupplychain.com/inventory-management-course/
@@abcsc Please check you email 😇😍
Good Morning Sir,
In Pharmacy Related Order How Can I calculate Holding Cost and Ordering Cost
Hi Lavkesh! The exact same way I explain in the video ;) talk with your finance department and or warehouse administration for holding costs
Also for TC ,is it the same for all the products? You mentioned that the TC is the total time it takes to process one order ,so my question is does it mean that the TC is the maximum time it takes to process one Order ?
Since the TC for an in-store buyer is different from an online buyer ,I am convinced that the TC for the online buyer is the maximum TC because there’s not much cost incurred by the business if the customer buys in store.
How about the shipping/freight cost?
Isn't here a problem with TC. Because if you order 1 pallet the costs are different than if you order full truck. If you factor in transport costs + bigger order means higher costs of putting items in the warehouse.
Awesome content - thank you
Glad you enjoyed it!
Very useful.. thanks Bro!
My pleasure bro ;-) ABC XYZ analyse tutorial coming next week 🚀 Stay tuned and let me know if you like it too 😁
First comment. Always glad to watch your videos
Ahah, you are the best @Mi Do, thanks for your support ! I am publishing the safety stock tutorial next week. Can't wait your first comment again ;-) Take care
@@abcsc my heartfelt thanks for those useful informations!
Hi Edouard,
Thank you very much for the instructing videos, I am a frequent watcher of all your videos.
If you would be interested in offering even mor of your time to me - I would really appreciate if you could help me with one question I have about the EOQ.
What I'm wondering is.
The Transaction Cost part - this is just for that single product type?
If for example the transaction cost is 100 Euro
But I will refill 10 different products from the supplier. The Transaction cost for each product should be about (or slightly weighted to demand of each) 10EUR / product - giving a much lower EOQ.
Is this thinking correct?
Thank you kindly / Ted
If you are looking to transition your supply chain funnel and apply this method without knowing the storage costs and so on, what would be a rough average % of a unit price. Should we use those % you have there? I'm trying to work out what the replen frequency and quantity should be for an ecomm fulfilment centre. Would we need to get these costs from the fulfilment centre first?
Without having the costs, is there a way to simplify this if cost isn't a primary objective, perhaps later this can be optimised?
Hi !
No: either you have the costs and you use the formula, or you don't, and you don't use it.
The percentage I use are just an indication, it can be specific to your business. To estimate the holding costs, I suggest to talk with your Finance department or the Warehouse administration staff! For cost of storage, insurance etc.
@AbcSupplyChain thank you, could you kindly recommend a channel or site where one could learn more about varied costs for supply chain. I'd like to have a general understand how to calculate a range of things like storage, freight, fulfilment etc.
Can i get your dataset for free ?
im actually learning what the fuck😯
Very nice knowledge you are giving here....but you are speaking like F16, please speak slowly and clear..
Too fast speech
Good afternoon, I went to download the sample excel file and Norton tagged abcsupplychain website as being malicious. Have you disputed this with Norton?
If you share your email I can send you my data so that You can hep me for Managing my Inventory
Hi Lavkesh. I reserve my time for Excel analysis only for members of AbcSupplyChain programs, I hope you understand. Still, you can register for my free workshop about Inventory Management as it could help you: abcsupplychain.com/inventory-management-workshop/
Hi Edouard,your videos are really great and helpful 😊🫱🏻🫲🏽.Can you please explain further as to how can you use the HC per category and not per unit/product .
I am asking because I am given an inventory management project and I am stressing about how am I going to get the HC for each and every unit.
Your response will be highly appreciated .