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EOQ calculation (DMR73001)

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This program is a batch program that will calculate the economic order quantity (EOQ) for items according to the WILSON formula.

The calculation of the EOQ in the DC1 Distribution system is designed to find the best quantity to buy subject to the minimising of acquisition and carrying costs. If the purchase price list is defined with quantity discounts, the system will use the discounts in the EOQ calculations.

Note: The EOQ will only be calculated for items with Item class set to 1 in the Item file, Inventory information panel.

The WILSON formula is as follows:

EOQ = SQRT (( 2 x order cost x forecast ) / ( price x stock rate ))

SQRT: square root

order cost: the cost connected to a purchase order, defined in the DIS control file.

forecast: the sales forecast for this year, defined in the Item file.

price: the valid purchase price, defined in the Item file. Note: For assemblied or sub-assemblied items the calculated standard cost is used.

stock rate: the interest calculated for keeping goods in stock, defined in the DIS control file.