economic order

Economic order refers to the systematic way organizations manage the procurement, production, and distribution of goods and services to meet demand efficiently. It involves planning inventories, setting reorder points, and determining optimal order quantities to balance costs like storage, ordering, and stockouts. Effective economic order management ensures that resources are used wisely, reducing waste and shortages while maintaining smooth operations. Essentially, it’s about finding the most cost-effective method to keep the right amount of inventory available to satisfy customer needs without unnecessary excess.