Question

Define eoq? Explain importance of eoq in inventory management

Answer 1

EOQ is the acronym for economic order quantity. The economic order quantity is the optimum quantity of an item to be purchased at one time in order to minimize the combined annual costs of ordering and carrying the item in inventory. EOQ is also referred to as the optimum lot size.

EOQ is one of the most prominent models used widely for effectiveinventory management. EOQcalculates the ordering quantity ofinventory using inputs of carrying cost, ordering cost, annual usage of the saidinventory. Working CapitalManagement is an importantspecialized function of financialmanagement.