What is the Economic Order Quantity and why is it important? What are the limitations of EOQ? There are several limitations to the EOQ model which should be noted. Firstly, the EOQ model assumes that there is no uncertainty in demand, which is often not the case in the real world. Secondly, the model also assumes that there is no cost associated with holding inventory, which is again not always the case. Thirdly, the model assumes that there is a single item which is being ordered, when in reality many businesses order multiple items at once. Finally, the model assumes that delivery times are instantaneous, which is often not the case in the real world.

Why do we need to know EOQ in business? There are a few key reasons why businesses need to know their EOQ (Economic Order Quantity). First, having this information can help businesses save money on inventory costs. Second, knowing the EOQ can help businesses avoid stock outs, which can disrupt operations and lead to lost sales. Finally, having this information can help businesses optimize their production schedules, which can lead to increased efficiency and productivity. What are the two important advantage of EOQ especially for manufacturing enterprises? There are two important advantages of EOQ (Economic Order Quantity) for manufacturing enterprises:

1. EOQ minimizes the total cost of inventory for the company. This includes the cost of holding inventory (i.e. the opportunity cost of the money tied up in inventory), as well as the cost of ordering new inventory.

2. EOQ ensures that the company has enough inventory on hand to meet customer demand, without incurring the cost of holding excessive inventory.

#### What is the importance of ABC analysis?

ABC analysis is a method of grouping items together based on their value. This is done by assigning a value to each item, and then grouping items together based on their value. The most valuable items are grouped together in the "A" group, the next most valuable items are grouped together in the "B" group, and so on.

This method of grouping items together is important because it allows businesses to focus on the most valuable items first. This is important because it allows businesses to make the most of their resources and to focus on items that will have the biggest impact on their bottom line.

### What are the factors affecting economic order quantity?

There are a number of factors that can affect the economic order quantity (EOQ) for a given product. These include the following:

1. The cost of the product: The cost of the product is a major factor in determining the EOQ. This is because the EOQ is based on the concept of minimising the total cost of inventory, which includes the cost of the product itself.

2. The cost of storage: The cost of storage is also a major factor in determining the EOQ. This is because the EOQ is based on the concept of minimising the total cost of inventory, which includes the cost of storage.

3. The cost of order processing: The cost of order processing is also a major factor in determining the EOQ. This is because the EOQ is based on the concept of minimising the total cost of inventory, which includes the cost of order processing.

4. The lead time: The lead time is also a major factor in determining the EOQ. This is because the EOQ is based on the concept of minimising the total cost of inventory, which includes the cost of lead time.

5. The demand: The demand is also a major factor in determining the EOQ. This is because the EOQ is based on the concept of minimising the total cost of inventory, which includes the cost of inventory turnover.