Economic order quantity eoq model inventory

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nsophisticated inventorymonitoring technique that is typically applied to C group items and involves reordering inventory when one of two bins is empty. economic order quantity (EOQ) model Inventory management technique for determining an item’s optimal order size, which is the size that minimizes the total of its order costs and carrying costs. order costs The fixed clerical costs of placing and receiving an inventory order. carrying costs The variable costs per unit of holding an item in inventory for a specific period of time. A firm using the ABC inventory system divides its inventory into three groups: A, B, and C. The A group includes those items with the largest dollar investment. Typically, this group consists of 20 percent of the firm’s inventory items but 80 percent of its investment in inventory. The B group consists of items that account for the next largest investment in inventory. The C group consists of a large number of items that require a relatively small investment. The invento...
View Full Document

This document was uploaded on 01/19/2014.

Ask a homework question - tutors are online