What Is the EOQ or Economic Order Quantity Model and How Is It Different From the ROP Reorder Point?

What Is the EOQ or Economic Order Quantity Model and How Is It Different From the ROP Reorder Point?

Imagine for a moment that you own a sports shop and you demand to regularly order baseball bats from a factory which you sell to your own customers. However, on some months, you run outside of baseball bats to sell. On other months, you still have unsold baseball bats at the end of the month yet your monthly delivery still comes. As a result, you end up with also many unsold baseball bats. In the past, you tried to remedy this difficulty by ordering only when your stock had run outside. Unfortunately, you then encountered another difficulty. You found outside that every age you ordered a fresh batch, it took 5 days for the delivery to come. Therefore, you finished up with 5 days of nothing to sell which resulted in lost sales opportunities.
Tags: | marketing | current affairs | raising children |