EOQ |
The EOQ tab enables you to define values used to calculate economic order quantities (EOQ), reorder points, and safety stock levels for all parts in inventory.
Tip: Some experimentation over a period of time is required; it takes at least one year to accumulate the data required to make meaningful EOQ calculations.
Detail View
Data in the fields on the bottom section of this tab specify the values. Unless otherwise indicated, these fields are required.
Economic Order Quantity (EOQ) calculation values
Cost per order
Cost to process an order for parts, without regard to the number of parts ordered or the value of the parts ordered. If this value is high in relation to the unit cost of the part at last purchase (last order price), this value will dominate the EOQ calculation for the part. Consider a small value for cost per order.
Carrying cost percentage
Percentage (in the form 00.0000) of the total amount invested in inventory that reflects the actual cost of carrying the inventory investment for 1 year. Costs of carrying inventory include return on the investment in inventory as well as the space, personnel, and other costs incurred to maintain a particular level of inventory. The total of these costs for 1 year, divided by the average total inventory value, equals the required percentage.
Tip: The value must be greater than zero for EOQ values to be computed.
Maximum number of stockouts per year
Maximum number of stockouts permitted for each inventory category (A, B, C, and OTHER). These values must be greater than zero.
A: Maximum number of stockouts permitted for each part in inventory category A.
B: Maximum number of stockouts permitted for each part in inventory category B.
C: Maximum number of stockouts permitted for each part in inventory category C.
Other: Maximum number of stockouts permitted for each part in any inventory category other than A, B, or C.
Maximum number of lead time occurrences for EOQ calculations
Maximum number of lead time values used in EOQ calculations. The lead time on all parts is tracked from time of order to time of receipt. The EOQ values for a part depend on how long it takes to receive the part after you order it. To specify that all available values be used, type zero.
Maximum age of a lead time occurrence for EOQ calculation (months)
Maximum age (in months) of lead time data used to calculate EOQ values. (Lead time data may become irrelevant as it gets older.) To specify that all available values be used, type zero.
Minimum age of part for EOQ calculation (months)
Minimum number of months the part must be defined before EOQ values are calculated for the part.
This field is used only if the Manage parts ordering and Economic Order Quantity (EOQ) field on the General tab is set to CENTRALLY. If the field is set to BY LOCATION or ENTERPRISE, refer to the comparable field on the Inventory tab on the Data -> Setup -> Organization Structures -> Locations -> Primary Information screen.
_______________
See Also