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[esimoens]

Define the following terms:

Economic order quantity

Cycle time

Ordering cost

Reorder point

Lead time

 

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Economic Order Quantity (EOQ) is a formula that calculates the optimum quantity of goods to order so as to minimize the total cost of ordering and holding inventory.

Cycle time is the length of time required to complete a single order or transaction, from start to finish. It encompasses all the steps involved in the process, including processing the order, picking and packing the goods, and shipping them out.

Ordering cost is the cost incurred in placing an order for inventory, which includes the cost of processing the order, communication, and paperwork, among other things.

Reorder point is the inventory level at which a new reorder needs to be placed to ensure that there is sufficient inventory to meet demand. It is calculated by taking into account the lead time, the expected demand, and the safety stock.

Lead time is the time it takes for an order to be fulfilled from the moment it is placed, including the time required for production, delivery, and any other factors that may delay the shipment. It is an important factor in inventory management and helps determine the reorder point.