Calculate the EOQ for a store to determine the most efficient quantity to order for inventory items. EOQ represents the ideal balance between ordering costs and inventory holding costs for items being demanded annually at a constant rate. EOQ helps manage inventory by minimizing order costs and holding costs for each item.
To calculate EOQ:
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Select Materials > Process > Calculate EOQ.
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Specify this information:
Organization - Specify the organization for which to calculate EOQ if you use multi-organization security.
Date From - Specify the date of the item’s first analysis.
Date To - Specify the date of the item’s last analysis.
Store - Specify the store for which to calculate EOQ.
Part - Specify the part for which to calculate EOQ.
Stock Class - Specify the class of the stock for which to calculate EOQ.
ABC Class - Select the class of the stock (A, B, or C) for which to calculate EOQ.
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Choose one of these options:
Option
Description
% of Average Price
Select to calculate EOQ with a percentage of average price. Skip step 11.
The system uses this equation to calculate EOQ based upon % of Average Price.
Holding Cost % is required.
Fixed Value
Select to calculate EOQ with a fixed value. Skip step 10.
The system uses this equation to calculate EOQ based upon Fixed Value.
Holding Cost is required.
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Specify the following:
Holding Cost % - Specify the cost for the holding percentage.
Holding Cost - Specify the holding cost.
Fixed Order Cost - Specify the fixed order cost.
Print Calculated EOQ - Select to print the EOQ report.
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Click Process.
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Select each store for which to update the order quantity.
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Click Update Order Qty. The system updates the order quantity on the Stores page of the Parts form for each selected parts record with the value in New Order Qty.