Determine the formula of the economic order quantity, Operation Management

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Determine the formula of the Economic Order Quantity.

The formula for Economic Order Quantity (EOQ):

EOQ = √((2x CO x D)/(CH)

Here

D = Annual demand (units)  

CO = Fixed cost for every order placed

CH = Cost of holding one unit into stock for one annum (it may comprise a cost of capital for money' tied up' within the value inventory).


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