As inventory was increasing, we decided to implement EOQ model for raw material planning. After lots of effort we were able to calcualte the ordering cost, holding cost and reorder points for calcualting the EOQ quantites.
However there are few practical problems faced :
1. The EOQ so calculated differs from minimum order quantity (MOQ) or Standard Quantity offered by the supplier.
2. Sometimes the EOQ does not ensure that raw material will be available in sufficient to meet current months forecast.
Can any one help how to overcome these problems. The objective being to strike a balance between ROL, EOQ & MOQ.
Also if there is any example that can be shared to calculate ordering cost, holding cost & reorder point, then that would be really helpful.
30th January 2009 From India , Vadodara
Dear Mr.Manoj,
I think the only solution for you is SAP. It is an affordable, easy to use software specially designed for SME's. If you want i can help you out in getting it. Kindly contact me if you are interested, in SAP we have other Affordable products for lifetime support.
Thanks & regards,
Cooperp solutions.
4th February 2009 From India , Bangalore
Please note. EOQ is economical to you MOQ is economical to your supplier. They rarely meet. They have to be brought nearer through Bilateral negotiations.
18th February 2009 From India , New Delhi
Dear Mr Manoj:
Every time while ordering the EOQ will require to be rounded off to MOQ.
If the supplier is not supplying only to you and if your quantities are not too big supplier will not oblige to match their MOQ with your EOQ.
Depending on situation, you have to trade off, to optimize your costs.
13th November 2013 From India, Mumbai
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