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Inventory: EOQ Method

Analyzing the inventories including the raw material inventories, work-in-process, and finished goods: How could I apply the EOQ method? What are the implications of process set-up times?
What would be other inventory issues that would occurring in the processes for the product line, i.e. costs, inventory turns, inventory accuracy, and inventory storage and movement?
What would be a plan for improving the inventory situation?
What would be a good way to go about inventory management?

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Analyzing the inventories including the raw material inventories, work-in-process, and finished goods. How could I apply the EOQ method?

The EOQ is the Economic Order Quantity, which is a well known model to effectively manage the inventory. EOQ determines the order quantity of inventory based on carrying cost, ordering cost and annual inventory. The annual inventory is based on annual usage of an inventory item. The carrying cost is based on the cost of warehousing inventory. The ordering costs are related to the cost of placing an order. EOQ helps with the two major questions of Inventory Management, which are (1.) when to order the inventory and (2.) how much inventory to order. Also, EOQ determines the optimum inventory quantity to order based on the available space and to meet the company's needs. The EOQ is based on the following formula: EOQ = ? (2 * ACPO * AUU) / (UC * CCP)
Where: ACPO = Acquisition Cost Per Order, UC = Per Unit Cost, AUU = Annual Usage of Units, CCP = Percentage of Carrying Cost. (The information was obtained at http://www.efinancemanagement.com/working-capital-financing/71-how-eoq-helps-in-inventory-management "How EOQ helps in Inventory Management?")

What are the implications of process set-up times?

The set-up time has a direct impact on the total process time. The set-up time is the time needed to set the equipment up to ...

Solution Summary

The expert examines inventory EOQ methods. A good way about inventory management are determined.

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