The Economic Order Quantity (EOQ) is the most cost-effective quantity of a product for you to purchase and hold in inventory. The EOQ balances the acquisition cost of your products and the carrying cost. The EOQ is the point at which these two pieces intersect.
The EOQ calculation considers the product's:
Daily demand – How much you sell it.
Cost – How much you sell it for.
Acquisition costs – How much you paid for it.
Carrying costs – How much is costs you to keep it in inventory.
Note: The EOQ is based on approximations. It is only an estimate and one of many factors to be considered when determining order quantities.
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