Reorder Quantity
(Economic Order Quantity).
Formula
EOQ = √(2 × Annual Demand × Ordering Cost / Holding Cost per Unit)
Real World
Tesco uses EOQ modelling for staple groceries like bread, balancing the cost of placing frequent small orders against the warehousing cost of holding large volumes.
Exam Focus
Show the EOQ formula and both cost components; marks are lost when only one side of the trade-off is discussed.
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