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EOQ Formula Excel Template

The document provides an example to calculate the economic order quantity (EOQ) for a pen manufacturing company. It states that the company's annual demand is 400 units, the holding cost per unit is $2, and the ordering cost per order is $1. Putting these values into the EOQ formula gives an EOQ of 20 units. A second example is then provided for a company called Den Pvt. Ltd. to calculate its EOQ. Various order quantities are tested along with the associated annual ordering and holding costs to determine that the EOQ that minimizes total costs is 400 units. A third example calculates the EOQ for a company that manufactures steel boxes and needs

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612 views

EOQ Formula Excel Template

The document provides an example to calculate the economic order quantity (EOQ) for a pen manufacturing company. It states that the company's annual demand is 400 units, the holding cost per unit is $2, and the ordering cost per order is $1. Putting these values into the EOQ formula gives an EOQ of 20 units. A second example is then provided for a company called Den Pvt. Ltd. to calculate its EOQ. Various order quantities are tested along with the associated annual ordering and holding costs to determine that the EOQ that minimizes total costs is 400 units. A third example calculates the EOQ for a company that manufactures steel boxes and needs

Uploaded by

Ana Marie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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EOQ Formula Excel Template

Prepared by Dheeraj Vaidya, CFA, FRM


[email protected]

visit - www.wallstreetmojo.com
Let's take an example to calculate EOQ for a pen manufacturing company where company’ annual
quantity demanded is 400, holding cost is $2 and the ordering cost is $1. Now we will put these
values in the above formula.

Ordering cost $1.00


Holding cost $2.00
Annual quantity demanded 400
Economic Order Quantity(EOQ) 20
Let us understand this with an example. A company name Den Pvt. Ltd. wants to know EOQ as it is a tool to calculate volume
frequency of order required for minimizing the cost of per order.

Actual Demand (D) 1,000


Volumn per Order Q
Ordering Cost (S) $500
Unit Cost (C ) $200
Holding Cost (H) $20
Carrying Cost (I) 10%

Volumn per Order Batches per Year Annual Order Cost Annual Holding Annual Total Cost
(Q) (D/Q) (D/Q*S) Cost (Q/2*H) (TC)
50 20 $10,000 $500 $10,500
150 7 $3,333 $1,500 $4,833
250 4 $2,000 $2,500 $4,500
350 3 $1,429 $3,500 $4,929
450 2 $1,111 $4,500 $5,611
550 2 $909 $5,500 $6,409
650 2 $769 $6,500 $7,269
750 1 $667 $7,500 $8,167
850 1 $588 $8,500 $9,088

EOQ 400
w EOQ as it is a tool to calculate volume and

Economic Order Quantity


$12,000
$10,000
$8,000
$6,000
Cost

$4,000
$2,000
$0
50 150 250 350 450 550 650 750 850 EOQ

Quantity
Annual Holding Cost Annual Order Cost Annual Total Cost
A company manufactures steel boxes for that it needs steel to calculate quantity required EOD need to be calculated.

Ordering Cost (cost per order) $10.00


Annual Quantity Demanded 2000
Holding Cost $1.00
EOQ 200
Number of Order Per Year 10
Ordering Cost 100
Holding Cost 100

Combine ordering and holding


cost at economic order 200
quantity

Number of order Volume per Average unit in Ordering cost Holding cost
Order (Q) inventory

1 2 1 $10 $1
2 6 3 $20 $3
3 10 5 $30 $5
4 20 10 $40 $10
5 30 15 $50 $15
6 40 20 $60 $20
7 50 25 $70 $25
8 100 50 $80 $50
9 150 75 $90 $75
10 200 100 $100 $100
11 250 125 $110 $125
12 300 150 $120 $150
13 350 175 $130 $175
14 400 200 $140 $200
ed EOD need to be calculated.

Combine ordering and holding cost


at economic order quantity

$11
$23
$35
$50
$65
$80
$95
$130
$165
$200
$235
$270
$305
$340

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