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Maximum Inventory Purchase Model Formula

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The maximum inventory purchase model is based on the number of units you expect to sell during the replenishment lead time, and the demand and supply variation. Check FAQs

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

Q_purch - Maximum Inventory Purchase Model?D - Demand per Year?C₀ - Order Cost?C_c - Carrying Cost?C_s - Shortage Cost?

Maximum Inventory Purchase Model Example

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Here is how the Maximum Inventory Purchase Model equation looks like with Values.

Here is how the Maximum Inventory Purchase Model equation looks like with Units.

Here is how the Maximum Inventory Purchase Model equation looks like.

928.4767 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25}{25 + 4})}

928.4767 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25}{25 + 4})}

928.4767 = \sqrt{2 \cdot 10000 \cdot \frac{200}{4} \cdot (\frac{25}{25 + 4})}

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Maximum Inventory Purchase Model Solution

Follow our step by step solution on how to calculate Maximum Inventory Purchase Model?

FIRST Step Consider the formula

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

Next Step Substitute values of Variables

∴

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

Next Step Prepare to Evaluate

∴

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

Next Step Evaluate

∴

Q purch = 928.476690885259

LAST Step Rounding Answer

∴

Q purch = 928.4767

Maximum Inventory Purchase Model Formula Elements

Variables

Functions

Maximum Inventory Purchase Model

The maximum inventory purchase model is based on the number of units you expect to sell during the replenishment lead time, and the demand and supply variation.

Symbol: Q_purch

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Maximum Inventory 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 Maximum Inventory Purchase Model?

Maximum Inventory Purchase Model evaluator uses Maximum Inventory Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*(Shortage Cost/(Shortage Cost+Carrying Cost))) to evaluate the Maximum Inventory Purchase Model, The maximum inventory purchase model is based on the number of units you expect to sell during the replenishment lead time, and the demand and supply variation. Maximum Inventory Purchase Model is denoted by Q_purch symbol.

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

FAQs on Maximum Inventory Purchase Model

What is the formula to find Maximum Inventory Purchase Model?

The formula of Maximum Inventory Purchase Model is expressed as Maximum Inventory Purchase Model = sqrt(2*Demand per Year*Order Cost/Carrying Cost*(Shortage Cost/(Shortage Cost+Carrying Cost))). Here is an example- 928.4767 = sqrt(2*10000*200/4*(25/(25+4))).

How to calculate Maximum Inventory Purchase Model?

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

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Maximum Inventory Purchase Model Formula

Maximum Inventory Purchase Model Example

Maximum Inventory Purchase Model Solution

Maximum Inventory Purchase Model Formula Elements

Other formulas in Manufacturing and Purchase Model category

How to Evaluate Maximum Inventory Purchase Model?

FAQs on Maximum Inventory Purchase Model

Variable Name