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EOQ Purchase Model with Shortage Formula

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EOQ Purchase Model with shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant. Check FAQs

EOQ ps = \sqrt{2 \cdot D \cdot \frac{C 0}{C c} \cdot (\frac{C s + C c}{C s})}

EOQ_ps - EOQ Purchase Model?D - Demand per Year?C₀ - Order Cost?C_c - Carrying Cost?C_s - Shortage Cost?

EOQ Purchase Model with Shortage Example

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Here is how the EOQ Purchase Model with Shortage equation looks like with Values.

Here is how the EOQ Purchase Model with Shortage equation looks like with Units.

Here is how the EOQ Purchase Model with Shortage equation looks like.

1077.033 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25 + 4}{25})}

1077.033 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25 + 4}{25})}

1077.033 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25 + 4}{25})}

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EOQ Purchase Model with Shortage Solution

Follow our step by step solution on how to calculate EOQ Purchase Model with Shortage?

FIRST Step Consider the formula

EOQ ps = \sqrt{2 \cdot D \cdot \frac{C 0}{C c} \cdot (\frac{C s + C c}{C s})}

Next Step Substitute values of Variables

∴

EOQ ps = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25 + 4}{25})}

Next Step Prepare to Evaluate

∴

EOQ ps = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25 + 4}{25})}

Next Step Evaluate

∴

EOQ ps = 1077.0329614269

LAST Step Rounding Answer

∴

EOQ ps = 1077.033

EOQ Purchase Model with Shortage Formula Elements

Variables

Functions

EOQ Purchase Model

EOQ Purchase Model with shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant.

Symbol: EOQ_ps

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find EOQ Purchase Model

Demand per Year

Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Demand per Year

Order Cost

Order Cost is the expenses incurred to create and process an order to a supplier.

Symbol: C₀

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Order Cost

Carrying Cost

Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.

Symbol: C_c

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Carrying Cost

Shortage Cost

The Shortage Cost is called the associate cost and is equal to the product's contribution margin.

Symbol: C_s

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Shortage Cost

sqrt

A square root function is a function that takes a non-negative number as an input and returns the square root of the given input number.

Syntax: sqrt(Number)

Other formulas in Manufacturing and Purchase Model category

Go EOQ Manufacturing Model with No Shortage

EOQ m = \sqrt{\frac{2 \cdot C 0 \cdot D}{C c \cdot (1 - \frac{D}{K})}}

Go EOQ Manufacturing Model with Shortage

EOQ ms = \sqrt{2 \cdot D \cdot C 0 \cdot \frac{C s + C c}{C c \cdot C s \cdot (1 - \frac{D}{K})}}

Go EOQ Purchase Model with No Shortage

EOQ p = \sqrt{2 \cdot D \cdot \frac{C 0}{C c}}

Go Maximum Stock Out Manufacturing Model

Q 1 = \sqrt{2 \cdot D \cdot C 0 \cdot C s \cdot \frac{1 - \frac{D}{K}}{C c \cdot (C c + C s)}}

How to Evaluate EOQ Purchase Model with Shortage?

EOQ Purchase Model with Shortage evaluator uses EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost)) to evaluate the EOQ Purchase Model, EOQ purchase model with shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant. EOQ Purchase Model is denoted by EOQ_ps symbol.

How to evaluate EOQ Purchase Model with Shortage using this online evaluator? To use this online evaluator for EOQ Purchase Model with Shortage, enter Demand per Year (D), Order Cost (C₀), Carrying Cost (C_c) & Shortage Cost (C_s) and hit the calculate button.

FAQs on EOQ Purchase Model with Shortage

What is the formula to find EOQ Purchase Model with Shortage?

The formula of EOQ Purchase Model with Shortage is expressed as EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost)). Here is an example- 1077.033 = sqrt(2*10000*200/4*((25+4)/25)).

How to calculate EOQ Purchase Model with Shortage?

With Demand per Year (D), Order Cost (C₀), Carrying Cost (C_c) & Shortage Cost (C_s) we can find EOQ Purchase Model with Shortage using the formula - EOQ Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*((Shortage Cost+Carrying Cost)/Shortage Cost)). This formula also uses Square Root (sqrt) function(s).

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EOQ Purchase Model with Shortage Formula

EOQ Purchase Model with Shortage Example

EOQ Purchase Model with Shortage Solution

EOQ Purchase Model with Shortage Formula Elements

Other formulas in Manufacturing and Purchase Model category

How to Evaluate EOQ Purchase Model with Shortage?

FAQs on EOQ Purchase Model with Shortage

Variable Name