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What is 'EOQ' in Inventory control ? 

What is 'EOQ' in Inventory control ?  Correct Answer Economic Order Quantity

EOQ  (Economic Order Quantity).

  • It is the ideal order quantity a company should purchase to minimize the inventory costs such as order cost, shortage cost, etc.  EOQ formula is used to reduce inventory costs.  
  • EOQ means the optimum amount of items that should be ordered at any point of time. It is a model that is used to calculate the optimal quantity that can be purchased to minimize the cost of both the carrying inventory and processing of purchase orders. 

The mathematical formula for EOQ:

EOQ = √(2×A×O)/C

where EOQ = economic order quantity

A = annual demand in units

O = cost incurred to place a single order

C = carrying cost per unit per year

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