Equations 6-1 through 6-8 are associated with the economic order quantity (EOQ).
(6-1)
(6-2)
(6-3)
(6-4)
(6-5)
Total relevant inventory cost.
(6-6)
(6-7)
EOQ with
(6-8)
Reorder point: d is the daily demand and L is the lead time in days.
Equations 6-9 through 6-13 are associated with the production run model.
(6-9)
(6-10)
(6-11)
(6-12)
(6-13)
Optimal production quantity.
Equation 6-14 is used for the quantity discount model.
(6-14)
Total inventory cost (including purchase cost).
Equations 6-15 to 6-20 are used when safety stock is required.
(6-15)
General formula for determining the reorder point when safety stock (SS) is carried.
(6-16)
Reorder point formula when demand during lead time is normally distributed with a standard deviation of
(6-17)
Formula for determining the reorder point when daily demand is normally distributed but lead time is constant, where
(6-18)
Formula for determining the reorder point when daily demand is constant but lead time is normally distributed, where
(6-19)
Formula for determining the reorder point when both daily demand and lead time are normally distributed, where
(6-20)
Total annual holding cost formula when safety stock is carried.
Equation 6-21 is used for marginal analysis.
(6-21)
Decision rule in marginal analysis for stocking additional units.