Economic Order Quantity.
The order size that minimises your total inventory cost (ordering + holding). Plus reorder point, safety stock, and how often to place orders. The classic Wilson formula adapted for Indian working-capital realities.
units per year
₹ — admin, transport, inspection per PO
₹ — purchase price per unit
% per year — typical India 18–25% (capital + storage + insurance + obsolescence)
days from PO to receipt
units / day — daily demand standard deviation
% — fill rate target (95% → Z=1.65, 99% → Z=2.33)
EOQ — OPTIMAL ORDER SIZE
—
units per order
Reorder point (ROP)
—
Safety stock
—
Orders per year
—
Days between orders
—
Total annual cost
—
Holding cost / unit / yr
—
EOQ = √(2·D·S / H) where H = i × C
Safety Stock = Z × σ_D × √L
ROP = (D/365) × L + Safety Stock
Total Cost = D·C + (D/Q)·S + (Q/2)·H
Safety Stock = Z × σ_D × √L
ROP = (D/365) × L + Safety Stock
Total Cost = D·C + (D/Q)·S + (Q/2)·H