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What is the relationship between EOQ and inventory management?

Asked 3 years ago

Why is economic order quantity so beneficial in managing inventory? Are there any examples of companies that use EOQ for their inventory management?

Jolina Regin

Saturday, October 16, 2021

The EOQ is beneficial to any business since it reduces inventory costs leading to more profit. For example, understocking causes frequent ordering of stock that causes high inventory costs because of the frequent shipping, ordering, and handling costs. You’ll save money when you order at your EOQ value than overstocking that also increases inventory costs.

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