EOQ Manufacturing Model with Shortage Calculator

✖Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year.ⓘ Demand per Year [D]			+10% -10%
✖Order Cost is the expenses incurred to create and process an order to a supplier.ⓘ Order Cost [C₀]			+10% -10%
✖The Shortage Cost is called the associate cost and is equal to the product's contribution margin.ⓘ Shortage Cost [C_s]			+10% -10%
✖Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.ⓘ Carrying Cost [C_c]			+10% -10%
✖Production Rate refers to the number of goods that can be produced during a given period of time.ⓘ Production Rate [K]			+10% -10%

✖EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant.ⓘ EOQ Manufacturing Model with Shortage [EOQ_ms]

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EOQ Manufacturing Model with Shortage Solution

STEP 0: Pre-Calculation Summary

Formula Used

EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate)))
EOQ_ms = sqrt(2*D*C₀*(C_s+C_c)/(C_c*C_s*(1-D/K)))
This formula uses 1 Functions, 6 Variables

Functions Used

sqrt - A square root function is a function that takes a non-negative number as an input and returns the square root of the given input number., sqrt(Number)

Variables Used

EOQ Manufacturing Model with Shortage - EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant.
Demand per Year - Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year.
Order Cost - Order Cost is the expenses incurred to create and process an order to a supplier.
Shortage Cost - The Shortage Cost is called the associate cost and is equal to the product's contribution margin.
Carrying Cost - Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.
Production Rate - Production Rate refers to the number of goods that can be produced during a given period of time.

STEP 1: Convert Input(s) to Base Unit

Demand per Year: 10000 --> No Conversion Required
Order Cost: 200 --> No Conversion Required
Shortage Cost: 25 --> No Conversion Required
Carrying Cost: 4 --> No Conversion Required
Production Rate: 20000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

EOQ_ms = sqrt(2*D*C₀*(C_s+C_c)/(C_c*C_s*(1-D/K))) --> sqrt(2*10000*200*(25+4)/(4*25*(1-10000/20000)))

Evaluating ... ...

EOQ_ms = 1523.15462117278

STEP 3: Convert Result to Output's Unit

1523.15462117278 --> No Conversion Required

FINAL ANSWER

1523.15462117278 ≈ 1523.155 <-- EOQ Manufacturing Model with Shortage

(Calculation completed in 00.004 seconds)

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Indian Institute of Technology (IIT), Kanpur

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< Manufacturing and Purchase Model Calculators

EOQ Manufacturing Model with Shortage

LaTeX Go EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate)))

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LaTeX Go Maximum Stock out Manufacturing Model = sqrt(2*Demand per Year*Order Cost*Shortage Cost*(1-Demand per Year/Production Rate)/(Carrying Cost*(Carrying Cost+Shortage Cost)))

EOQ Manufacturing Model with No Shortage

LaTeX Go EOQ Manufacturing Model No Shortage = sqrt((2*Order Cost*Demand per Year)/(Carrying Cost*(1-Demand per Year/Production Rate)))

EOQ Purchase Model with No Shortage

LaTeX Go EOQ Purchase Model No Shortage = sqrt(2*Demand per Year*Order Cost/Carrying Cost)

EOQ Manufacturing Model with Shortage Formula

LaTeX Go

What is the economic order quantity?

The Economic order quantity is the order quantity a company should purchase to minimize inventory cost. For a manufacturing model without shortage, we assume that the demand is constant and inventory is depleted at a fixed rate until it reaches zero.

How to Calculate EOQ Manufacturing Model with Shortage?

EOQ Manufacturing Model with Shortage calculator uses EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))) to calculate the EOQ Manufacturing Model with Shortage, EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant. EOQ Manufacturing Model with Shortage is denoted by EOQ_ms symbol.

How to calculate EOQ Manufacturing Model with Shortage using this online calculator? To use this online calculator for EOQ Manufacturing Model with Shortage, enter Demand per Year (D), Order Cost (C₀), Shortage Cost (C_s), Carrying Cost (C_c) & Production Rate (K) and hit the calculate button. Here is how the EOQ Manufacturing Model with Shortage calculation can be explained with given input values -> 1523.155 = sqrt(2*10000*200*(25+4)/(4*25*(1-10000/20000))).

FAQ

What is EOQ Manufacturing Model with Shortage?

EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant and is represented as EOQ_ms = sqrt(2*D*C₀*(C_s+C_c)/(C_c*C_s*(1-D/K))) or EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))). Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year, Order Cost is the expenses incurred to create and process an order to a supplier, The Shortage Cost is called the associate cost and is equal to the product's contribution margin, Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory & Production Rate refers to the number of goods that can be produced during a given period of time.

How to calculate EOQ Manufacturing Model with Shortage?

EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant is calculated using EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))). To calculate EOQ Manufacturing Model with Shortage, you need Demand per Year (D), Order Cost (C₀), Shortage Cost (C_s), Carrying Cost (C_c) & Production Rate (K). With our tool, you need to enter the respective value for Demand per Year, Order Cost, Shortage Cost, Carrying Cost & Production Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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