Economic Order Quantity (EOQ) Management

Economic Order Quantity (EOQ) is a formula used in inventory management to determine the ideal amount of stock a business should order to minimize total costs. These costs include ordering expenses and holding costs (like storage and spoilage). By calculating the EOQ, a company can find the most cost-effective quantity to purchase, striking a balance between ordering too frequently and holding excessive inventory. This approach helps businesses maintain sufficient stock to meet demand while reducing unnecessary costs, ultimately improving efficiency and profitability.