Economic Order Quantity Formula Continued
September 13th, 2009
Deriving Economic Order Quantity Formula
The Economic Order Quantity calculation below derives the formula for Economic Order Quantity. Simple calculus is used. First, we rewrite T in the form that is easily differentiable.
At minimum value, dt/dQ is zero therefore:
Remember Q is Economic Order Quantity and we have arrived at the Economic Order Quantity formula.
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