Economic Order Inventory Control Model

As per research today’s uncertainities in economy, companies are searching for alternative ways to remain stable in market. This study goes through the process of analyzing the company’s current forecasting model and recommending an inventory control model by ordering optimum units to help them solve their current issue. As a result, an Economic Order Quantity (EOQ) and a variable cost was recommended to help them reduce their product stock outs. The shortage of raw material for production always makes the process discontinuous and reduces the productivity. The ABC analysis technique for the inventory control system is first used to identify the most important multiple products and then the economic order quantity (EOQ) of each product is

A large order-quantity reduces ordering frequency, and, hence ordering cost/ month, but requires carrying a larger average inventory, which increases storage (holding) cost. On the other hand, a smaller order-quantity reduces average inventory but requires more frequent ordering and higher ordering cost. The cost- minimizing order-quantity is called the Economic Order Quantity (EOQ). This chapter builds intuition about the perfect use of EOQ, which makes the model useful for management decision-making even if its inputs (parameters) are only known to be within a range of possible values. This hapter also provides idea about choosing an inventory-management system, not just an EOQ.

II.OBJECTIVES OF THE STUDY

To find out the economic order quantity of the various products of the company.

To analyze the inventory management technique used in the company.

To suggest ideas to manage the order quantity so company can save annual by taking difference of variable

When the first model T Fords was there, manufacturers were getting the financial benefits of inventory. I recently read inventory management, a textbook that was part of a “Modern Business Course” online. The text book published in 1931, was essentially a excellent book on inventory management in a manufacturing environment. A 70 year old book contained a section on minimum cost quantity, which is what we now refer to as Economic Order Quantity (EOQ), we can imagine that we have calculated EOQ at a time in a office using the inventory books, a mechanical adding machine and a slide rule. Time consuming as this was some manufactures recognized the financial benefits of taking a scientific approach to making these inventory decisions.

Its not that EOQ always a positive tool iy may that some corporate having conflict with EOQ. Measuring performance solely by inventory turns is one of the most prolific mistakes made in the name of inventory management. Many companies have developed nice goals in increasing inventory turns only to find their bottom line has reduce due to increased operational