Reorder quantity, calculation

This basic formula has been used to develop an economic order quantity (EOQ) model (Carroll, 1998 Huffman, 1996 Silbiger, 1999 Tootelian and Gaedeke, 1993). While the EOQ model may be difficult to derive and calculate, it is often incorporated into computer software used by many pharmacies to manage their inventory and make purchasing decisions. The EOQ model describes the level of inventory and reorder quantity at which the combined costs of purchasing and carrying inventory are at a minimum. The formula is... 

Calculation of Reorder Quantity for High Mover Product... 

An alternative way to deal with variable demand is to use the periodic order quantity. Here, the reorder quantities are revised more frequently. The method uses mean time between orders CTBO), which is calculated by dividing the EOQ by the average demand rate. In the above example, the EOQ is 1,000 and the average demand 410. The economic time interval is therefore approximately 2. An example shown in Table 6.2 illustrates the same situation as in Table 6.1 in terms of demand changes and safety stock level. However, the reorder quantity is based on total demand for the immediate two weeks of history. This reorder method is called periodic order quantity (POQ). 

For the 120 style/colors in this department, we determined that the initial order quantity by solving problem (PHr) using the heuristic modified to include returns. We then observed x, the sales until the second week and set the reorder quantity Q2 using the procedure developed in Sect. 3. Since at the end of the season we knew total sales and actual sales per week for each dress, we were able to calculate the stockouts, overstock, backorders, dollar sales and profits that would have resulted from our ordering policy. To compare our method with the current ordering rules, we also calculated these... 

After a company has a handle on the amount spent on holding and ordering costs, it can calculate an optimal order quantity that minimizes these costs. In addition, it can calculate how often to order the optimal quantity. These ideas feed into reorder points. To what point can inventory decline before an order must be placed to minimize stock-outs and risk losing sales ... 

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