Economic Order Quantity
EOQA formula that calculates the optimal order quantity that minimizes total inventory costs, balancing ordering costs against holding costs. EOQ helps manufacturers determine how much to order and when to order to maintain efficient inventory levels without overstocking or stockouts.
RELATED TERMS
Material Requirements Planning
A production planning and inventory control system that calculates what materials are needed, how many are required, and when they must be available to meet production schedules. MRP uses bill of materials data, inventory levels, and master production schedules to generate purchase orders and work orders.
Just-In-Time
A production strategy that aligns raw material orders and delivery with production schedules to minimize inventory holding costs and waste. JIT manufacturing produces goods only when needed, in the quantities needed, reducing storage requirements and improving cash flow.
Warehouse Management System
Software that optimizes warehouse operations including receiving, putaway, picking, packing, and shipping of inventory. WMS tracks inventory locations, manages storage space, and coordinates material movement to improve accuracy and efficiency in distribution and fulfillment operations.