PURCHASING > Master Files > Items > Recalculate EOQ
(also available in other areas of the system)
This is used to mass-update the Economic Order Quantity (EOQ) for many items in the Item Master File. To update the EOQ for a single item, you can do so in the Item Master File itself.
You may want to update the EOQ, for example, if interest rates and/or the internal administration cost of producing orders change.
You can choose to update all EOQs or only those EOQs that are zero (undefined).
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The Annual Purchases Field in the [INVENTORY] folder of the Item Master File must be populated for the EOQ to be re-calculated. |
Questions & Options
1.:
a.Select to re-calculate the EOQ for all items in the Item Master File.
b.Select to only re-calculate the EOQ for items that have zero (empty, undefined) EOQs.
2.:
a.Select to calculate the EOQ using the following standard formula.
b.If you are using the Inventory Control Module, you can select to set the EOQ to a specific number of weeks worth of inventory/supply based on your usage history for each item. For example, if you specify four (4) weeks, SpendMap will forecast how much stock you typically use in a four week period and will set the EOQ for each item accordingly.
3.: If you selected the STANDARD formula, enter:
a.The current Interest Rate (Carrying Cost/Year, that is, the cost of money).
b.Administration Order Cost: the average internal administrative cost of processing an order (and related approvals, receipt, invoice approval, filing for reporting and audit purposes, etc.). Industry experts agree that this can be as much as $100 in a manual environment and around $30 in an automated environment.
