How the System Uses EOQ

The system uses the Economic Order Quantity (EOQ) in suggesting quantities to purchase or transfer. It also places restrictions on the use of the EOQ so it does not distort the reality of product demand:

The EOQ appears on a suggested purchase orders, but the Suggested P/O program will only suggest ordering the EOQ if: the EOQ exceeds the calculated line point for the product, less the current projected inventory level.
The system does permit an EOQ to exceed six times the monthly demand of a product.
If the low sale quantity for an item is greater than the EOQ, the system uses the low sales quantity in place of the EOQ.

This adjustment ensures that products sold in logical quantities are not purchased in quantities less than what the customer is likely to request. For example, tires are sold in sets of four, although the EOQ might suggest three.