Economic Production Quantity (EPQ) Example

In this keynote video we will show how to apply the Economic Production Quantity. The Economic Order Quantity (EOQ) model determines the order size at which the sum of the total inventory and ordering costs is lowest. It assumes, amongst other things, that the order is delivered in one single batch. If instead, the order is delivered incrementally in a series of smaller batches, then the Economic Production Quantity (EPQ) model determines the optimal lot size. This situation is applicable to the production shop floor. The EOQ ordering costs are replaced by the setup costs. The EPQ is also known as the EMQ (Manufacturing), or the EBQ (Batch).