EOQ Limitations.pdf - EOQ Limitations u2022 Exact lot size...

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EOQ Limitations Exact lot size may not be possible/allowed Time between orders may not be feasible/allowed Size of EOQ may be too large not enough storage space Quantity discounts not considered if offered one would have to calculate an EOQ for every price level Purchasing Process Requisition (using material requisition) o Communicate a specific need to purchasing Supplier Selection (may submit a request for quotation) o In stock, used to be in stock, never in-stock o Present supplier, new supplier Place Order (using purchase order) o Simple or complex process o Analysis, negotiation, contracts, establish re-order system Track order o Communicate with supplier Receive order o Inspect, record, shelve Make or Buy? Make o Proprietary technology, no competent supplier, better quality control, idle capacity, control (lead times, costs) Buy o Insufficient capacity, lack of expertise, quality Centralized vs Decentralized Purchasing Centralized o

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