what economic order quantity

what economic order quantity (EOQ) is a key concept in inventory management that helps businesses determine the optimal order quantity for a product in order to minimize the total cost of inventory, including ordering and holding costs. EOQ is calculated using a formula that takes into account the demand for the product, the cost per order, and the holding cost per unit. The goal of EOQ is to find the most cost-effective order size that ensures a business can meet customer demand without overstocking or understocking. By calculating EOQ, businesses can streamline their supply chain, reduce excess inventory, and improve overall efficiency. The EOQ model is especially useful for companies that deal with large volumes of products and need to manage inventory in a cost-effective manner. By implementing EOQ, businesses can reduce the risk of stockouts and inventory waste, leading to better financial performance and smoother operations.