On a regular basis, for instance, once a week or once a month, items will be reordered on the basis of the forecast need plus the buffer stock to avoid stock-out less stock in hand. A more sophisticated approach is based around the idea
of economic order quantity (EOQ]. The total cost associated with a purchase is a combination of the invoice cost, plus the administration cost (postage,clerical time, etc.) plus the storage cost (running the freezer, etc.). These costs
will vary, as shown in Table 6.2. Somewhere between the extremes of one large all orders lies-the point where the total cost will be order and very many Small lowest. The EOQs can be calculated using mathematical formulae or by preparing