Economic Order Quantity (EOQ)

eoq(a, d, h)

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