For everyone from brand-new start-ups to large-scale operations with many years of experience under their belt, NORDMET is the perfect source for remarkable quality, OEM manufacturing, and assembly. We strive to offer competitive pricing, even on orders as small as one or two pieces.
The optimum order size
The optimum order size model is the most common concept used in stock and material inventory management. When choosing the size of the batch to be ordered, many factors need to be taken into account, which requires different decisions, suggesting that the size of the production batch should be increased or reduced. Increasing the batch increases storage costs and decreases preparation costs. In such conditions, it becomes important to determine the optimal series of product production and the optimal batch of order.
With the increase in the size of the order, the level of average inventories is increasing. This, in fact, results in a decrease in the costs of creation and an increase in the costs of maintaining inventories. On the other hand, if the frequency of orders increases, the size of the average inventories will decrease. Therefore, maintenance costs will also decrease, and inventory creation costs will increase. That's where Nordmet can assist in determining the economic order quantity.
When calculating the EOQ level, the following assumptions should be made:
- the monthly or annual demand for the ordered product is known and predictable;
- the receipt of the ordered product occurs in a very short time from the order date;
- the cost of a single order is fixed.
Contact us if you have a question regarding order size.