Note: This only applies if IBS Inventory Control is not installed.
Economic Order Quantity (EOQ) is used in the Purchase suggestion handling to suggest the quantity to purchase. See About purchase suggestions (IBS Stock Replenishment).
The system uses the Wilson formula to calculate the EOQ. If the item has quantity limits defined in the Item file, Purchase prices panel the system uses the quantities in the formula. See Calculate EOQ using quantity dependable prices (IBS Stock Control).
Wilson formula
The Wilson formula is as follows:
| SQRT (2 * order cost * annual forecast) / (purchase price * stock rate) |
where SQRT is square root
Note: The order cost and the stock rate are defined in the DIS control file. The forecast and the purchase price are defined in the Item file for each item.
Prerequisites
The following information must be defined if you want the system to calculate EOQ for an item:
- Item class in the Item file, Inventory information panel must be set to 1.
- EOQ calculation code in the Item file, Inventory information panel must be set to YES.
- An annual forecast must be defined in the Annual forecast field in the Item file, Inventory information panel.
Note: The annual forecast is the quantity you forecast to sell (deliver) during the year.
- A purchase price must be defined for the main supplier, for the default purchase unit for that supplier, in the Item file, purchase prices panel
- The stock rate in the DIS control file
When the calculation is performed, you can view the calculated EOQ in the Order quantity field in the Item file, Inventory information panel.
Note: The system will calculate the EOQ for all items where the above prerequisites apply.
Enquiries and printouts
- Item file enquiry
- Item file printout