Understand that ordering too little (frequent small orders) racks up ordering costs, ordering too much (infrequent large orders) racks up holding costs, and EOQ is the exact order size where those two costs balance and total cost is minimized.
Total Cost at Q
$1000Minimum Cost (at EOQ)
$1000EOQ = √(2·D·S / H)Total cost: TC(Q) = (D/Q)·S + (Q/2)·HMinimum total cost (at Q = EOQ): √(2·D·S·H)Set the order quantity slider Q equal to the computed EOQ (within 5%). This is the cost-minimizing order size.
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