ECONOMIC Order Quantity

Without bombarding you with complicated mathematical formula's, or asking that you undertake a Degree in Operations Management - we do want to touch on the concept of Economic Order Quantities.

Economic order quantity is the level of inventory that minimizes the total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models.

How can I Apply this?

The option of sets of 5, 20 and 100 are there to help you manage this process.

The incentives are many - ordering in a set of 100 will guarantee you the highest possible profit margin. However if you only sell 2-3 items a month, then this would be extremely inefficient for your business, as critical marketing funds would be sitting in product.

If you should find yourself placing an order once a month, for a set of 5 of a couple of Stock Items, you may wish to evaluate just what your net. cash out is on the Sum of all the freight & handling components - and weight this up against the cash flow benefits you have assigned to the purchasing behavior.

Credit Cards offer you a 30 day line of credit however the interest rates are seemingly high, many only begin to charge interest after the 31st day, so in essence you may have a free line of credit already waiting!