Estimating Costs in the EOQ Formula
The EOQ formula (Harris, Fact Mag Manage 10(2):135-6-152, 1913) provides a balance between setup costs and holding costs in the system. This formula has been widely developed in the literature. However in the industrial reality, it is often difficult to know the exact value of these setup and holding costs. In this paper, we develop a formula to estimate lot size from the values known in the company. It is verified that the behavior of these formulas meets expectations.
KeywordsEOQ Inventory management Setup cost Holding cost
The work described in this paper has been supported by Project “CORSARI MAGIC DPI2010-18243” from the Spanish Ministry of Science and Innovation.
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