EOQ Purchase 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%
✖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%
✖The Shortage Cost is called the associate cost and is equal to the product's contribution margin.ⓘ Shortage Cost [C_s]			+10% -10%

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

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EOQ Purchase Model with Shortage Solution

STEP 0: Pre-Calculation Summary

Formula Used

EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost))
EOQ_ps = sqrt(2*D*C₀/C_c*((C_s+C_c)/C_s))
This formula uses 1 Functions, 5 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 Purchase Model - EOQ Purchase 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.
Carrying Cost - Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.
Shortage Cost - The Shortage Cost is called the associate cost and is equal to the product's contribution margin.

STEP 1: Convert Input(s) to Base Unit

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

STEP 2: Evaluate Formula

Substituting Input Values in Formula

EOQ_ps = sqrt(2*D*C₀/C_c*((C_s+C_c)/C_s)) --> sqrt(2*10000*200/4*((25+4)/25))

Evaluating ... ...

EOQ_ps = 1077.0329614269

STEP 3: Convert Result to Output's Unit

1077.0329614269 --> No Conversion Required

FINAL ANSWER

1077.0329614269 ≈ 1077.033 <-- EOQ Purchase Model

(Calculation completed in 00.004 seconds)

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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)))

Maximum Stock Out Manufacturing Model

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 Purchase Model with Shortage Formula

LaTeX Go

EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost))
EOQ_ps = sqrt(2*D*C₀/C_c*((C_s+C_c)/C_s))

What is EOQ for purchase model with shortage?

Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. It assumes the demand is constant and inventory is depleted at a fixed rate until it reaches zero.

How to Calculate EOQ Purchase Model with Shortage?

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

How to calculate EOQ Purchase Model with Shortage using this online calculator? To use this online calculator for EOQ Purchase Model with Shortage, enter Demand per Year (D), Order Cost (C₀), Carrying Cost (C_c) & Shortage Cost (C_s) and hit the calculate button. Here is how the EOQ Purchase Model with Shortage calculation can be explained with given input values -> 1077.033 = sqrt(2*10000*200/4*((25+4)/25)).

FAQ

What is EOQ Purchase Model with Shortage?

EOQ purchase model with shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant and is represented as EOQ_ps = sqrt(2*D*C₀/C_c*((C_s+C_c)/C_s)) or EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost)). 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, Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory & The Shortage Cost is called the associate cost and is equal to the product's contribution margin.

How to calculate EOQ Purchase Model with Shortage?

EOQ purchase model with shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant is calculated using EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost)). To calculate EOQ Purchase Model with Shortage, you need Demand per Year (D), Order Cost (C₀), Carrying Cost (C_c) & Shortage Cost (C_s). With our tool, you need to enter the respective value for Demand per Year, Order Cost, Carrying Cost & Shortage Cost 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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