Economic Order Quantity

The EOQ Calculator [S2081] in OnRamp has been built with the logic required to help you make the best order policy decision with minimal work.

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The EOQ Calculator provides a graph that displays the total cost per year for different order times per year, with the carry costs displayed in orange, the order costs displayed in blue, and the total cost as the whole bar.

Based on the graph and the table above, you can decide on how much minimization to apply. For example: While the system suggests ordering 7 times per year for the lowest possible total, see Calculated Optimum Order Times/Yr, you may want to increase your order times to 10, since the price difference is $24 and you would have to carry less inventory, therefore using less space.

Once a decision has been made, you can set the order period for the part on the Part Master [S1009] > Planning tab along with the order policy type, which affects how the MRP handles the part ordering.