Comments on: So, what’s so wrong with EOQ?

By: Lawrence Loucka

Lawrence Loucka — Fri, 22 Oct 2010 16:42:21 +0000

Because the average inventory is half of the max-min Q. Think of a saw tooth time series graph where inventory goes up upon receipt and then declines as consumed until the next receipt. The average inventory is the area under the curve, or simplistically (max inventory – min inventory)/2

Read http://en.wikipedia.org/wiki/Economic_order_quantity
for a good write up on the total cost function.

By: Roberta

Roberta — Fri, 22 Oct 2010 15:57:53 +0000

Does anyone know why (EOQ = square root of 2 X QP/C) it is two times? Why not 3 x QP/C

By: Chicago Forklift

Chicago Forklift — Fri, 24 Sep 2010 20:42:40 +0000

agree with john. not all the formula will work, things are processing fast

By: Mike Parthum

Mike Parthum — Mon, 13 Sep 2010 17:35:04 +0000

I have an assignment that asks us to explore the limitations of EOQ relating to externalities which may be more important than the model’s cost terms. Would this refer to things like environmental impacts, defective product recalls or repairs, depletion of resources, etc.?

By: John Krech

John Krech — Thu, 26 Aug 2010 04:17:24 +0000

The EOQ formula is a classical and elegant formula but it not longer fits the world of business today. First, it is only based on minimizing variable cost and the cost to order in the age of e-commerce has been drastically reduced. Furthermore, the EOQ does not factor in safety stocks etc…

That is why we developed a new model based on a better metric – economic value added (also known as economic profit). We determine the safety stock and the order quantity at the point of maximum economic value added. We utilize Lean Six Sigma Methodology by utilizing color coded kanbans to communicate inventory status and maintain optimum levels.

We make doing inventory order management right easy.

By: Lawrence Loucka

Lawrence Loucka — Tue, 22 Dec 2009 19:31:43 +0000

Tolani, the EOQ formula “blows up” when the cost to place an order (or set up a machine)goes to zero. In the lean world we work toward single piece flow. We take hour long machine or process changeovers and find ways to get them done in minutes. When changeovers are minutes EOQ is irrelevant. EOQ Thinking usually goes in the other direction – it helps people justify large batches.

By: Tolani

Tolani — Tue, 22 Dec 2009 13:59:48 +0000

what are the limataion of eoq.

By: Lean Sigma Supply Chain » EOQ Slide Rule

Lean Sigma Supply Chain » EOQ Slide Rule — Sat, 04 Jul 2009 23:39:39 +0000

[...] scientists old enough to have been in college before say 1976 will appreciate the beauty of this Economic Order Quantity Slide [...]

By: Lean Sigma Supply Chain » Cutting off the tail

Lean Sigma Supply Chain » Cutting off the tail — Mon, 09 Mar 2009 02:06:18 +0000

[...] Economic Order Quantity, often abused. [...]

By: sharkong

sharkong — Wed, 21 Feb 2007 17:47:08 +0000

yeah~ your answer is very useful. Thanks a lot
However, such data is a confidential information, i’m just a student,
how can i obtain such infromation in a more easy way? such as internet, library ?

Anyway, thank for your answering!!! i just guessing will you reply me!! It’s really fun :)