Home / Inventory & replenishment
Enter annual demand, the cost of each setup or order, the item cost and holding cost to get the economic lot, total cost, average inventory and the setup needed for smaller lots.
Pre-sizing and estimating tool: results do not replace design, calculations or reports signed by a licensed professional, nor verification against the applicable codes and standards.
Annual setup cost, holding cost and total. The bottom of the curve is shallow: lots up to 30% off cost almost the same.
Inventory over three cycles: it builds up during production and falls with consumption.
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Use Q* = √(2 · D · S ÷ (i · C)). With demand of 24,000 units per year, a $280 order cost, a $12 item and 18% holding cost, EOQ is about 2,500 units.
With EOQ the lot arrives at once. With EPQ it is produced gradually while being consumed, so peak inventory is lower and the economic lot is larger by the factor 1 ÷ √(1 − D/P).
The economic lot grows with the square root of setup cost. Cutting setup by 75% halves the lot without raising total cost.
Important notice: Indus Metrics tools produce estimates and pre-sizing results from the data you enter and from published engineering methods. They do not replace design, calculations or reports signed by a licensed professional engineer (PE), nor verification against the applicable codes, standards and regulations, such as OSHA rules and the ASME codes. Material and fuel properties vary: check manufacturer data or your own process analyses before deciding. By using this site you agree to the Terms of Use.
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