EOQ(EconomicOrderQuantity) is called economic order quantity, that is, every order quantity with the minimum total inventory cost is obtained through inventory cost analysis, thus solving the inventory management problem of independent demand items.

The costs in EOQ inventory management mode mainly include:

(1) acquisition cost. Refers to the cost of obtaining some inventory materials, usually expressed by TCa, including ordering cost and purchasing cost.

(2) Storage cost. Refers to the expenses incurred in maintaining the inventory, including the interest payable on the funds occupied by the inventory, as well as various expenses incurred in using the warehouse, keeping the goods, and damage and deterioration of the goods, usually expressed by TCc. It is also divided into fixed cost and variable cost.

(3) Shortage cost. Refers to the losses caused by the interruption of supply due to insufficient inventory supply, such as the loss of sales opportunities, the loss of shutdown, the payment of fines for non-performance of contracts, etc., usually expressed by TCs.