How to Calculate EOQ with Quantity Discounts is a decision-making process used to determine the optimal order quantity for inventory management, taking into account quantity discounts offered by suppliers. For instance, a clothing store might use this method to determine the ideal number of shirts to order, considering the available discounts for bulk purchases.
Calculating EOQ with quantity discounts involves factors such as demand, ordering costs, and carrying costs. The Economic Order Quantity (EOQ) model, developed by F.W. Harris in 1913, provides a framework for determining the most cost-effective order size. By considering quantity discounts, businesses can optimize their inventory levels, reduce costs, and improve profitability.
