Economic Order Quantity (EOQ)
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Calculate the economic order quantity (EOQ) for an instantaneous replenishment inventory model. |
- syse.eoq(a: float, d: float, h: float) float
Calculate the economic order quantity (EOQ) for an instantaneous replenishment inventory model.
- Parameters:
A (float) – The cost to place one order.
D (float) – The number of units used per year.
h (float) – The holding cost per unit per year.
- Returns:
The EOQ that minimizes the total annual inventory cost.
- Return type:
float
Examples:
Let’s say that a small business that sells specialty coffee beans uses an instantaneous replenishment inventory model to manage its inventory of beans. The business purchases its coffee beans from a supplier and pays a fixed cost of $50 to place an order, regardless of the quantity ordered. The business uses 500 bags of coffee beans per year, and the holding cost per bag per year is $5. To determine the optimal order quantity, we can use the eoq function:
A = 50 D = 500 h = 5 eoq = syse.eoq(A, D, h) Output = 100