Purchase Solution

Inventory: EOQ Method

Not what you're looking for?

Ask Custom Question

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?

Please see attachments.

Attachments
Purchase this Solution
Solution Summary

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

Solution Preview

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 ...

Purchase this Solution
Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Use EOQ or order to meet demand?

    Is it better to minimize the cost of the inventory with a method like EOQ or to order only to meet demand? Why?

  • philosophies underlying JIT and EOQ approaches to inventory

    483454 Explain the differences in the basic philosophies underlying JIT and EOQ approaches to inventory management. Explain the differences in the basic philosophies underlying JIT and EOQ approaches to inventory management.

  • Economic Order Quantity: Minimizing Ordering and Inventory Costs

    While EOQ aims at minimizing inventory cost (ordering and carrying costs), the JIT method aims at zero inventory cost, particularly zero carrying costs. Related concepts: Forecasting Forecasting is determining in advance future events.

  • EOQ Model

    Average inventory=EOQ/2=55/2=27.5 units Annual carrying costs=Average inventory*carrying cost(H)=27.5*25=$687.5 Number of orders? Annual ordering cost?

  • EQQ, average inventory, order per year, and average daily demand

    EOQ = SQRT(2 x Demand x Ordering Cost / Holding Cost) EOQ = SQRT ( 2 x 250 x 100 / 20) EOQ = 50 Units Average Inventory = Order Size / 2 = 50/2 = 25 units Orders / year = Annual Demand / Order Size => 250 / 50 = 5 orders per year Average Daily Demand

  • Hungarian method and EOQ.

    401444 Demonstrate Hungarian method and EOQ. In making inventory decisions, the purpose of the basic EOQ model is to minimize a. carrying costs. b. ordering costs. c. stock on hand. d. the sum of carrying costs and ordering costs.

  • Determining EOQ and total costs at EOQ

    208578 What is Basic EOQ? What is TC at the EOQ? Calculate TC increase for 1000 units. Economic ordering quantity (EOQ) is a commonly used method for optimizing the inventory costs with ordering costs.

  • POQ, EOQ, and MRP Technique Lot-Sizing

    It is a method that is employed when the supply of raw materials or inventory (goods) is steady and foreseeable.

  • Economic Order Quantity - EOQ

    Inventory Holding cost = EOQ / 2 x holding cost = 250/2 x 1.5 = $187.5. C. Given the EOQ: What would be the average inventory? Avg Inventory = EOQ/2 = 125 units. D. Given the EOQ: How many orders would be made each year?

View More Related Solutions