Find EOQ without worshipping it
Calculate EOQ and identify when spare-parts assumptions weaken the result.
Motor belts have annual demand 600, order cost $45, and initial holding cost estimate $5.50 per belt per year. EOQ balances ordering cost against holding cost The common trap is accepting the formula output while ignoring shelf life, inspection losses, or demand instability. Set inputs Demand D = 600 belts/year, order cost S = $45/order, holding cost H = $5.50/belt/year. EOQ is only as useful as the cost assumptions behind these inputs. Calculate EOQ EOQ = square root of (2 x D x S / H) = square root of (54,000 / 5.50) = about 99 belts. The formula suggests…
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