Enterprise glossary and term center
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- Enterprise terms
- Fixed Order Quantity
- How do you calculate fixed order quantity?
Fixed Order Quantity - How do you calculate fixed order quantity?
We can calculate the order quantity as follows: Multiply total units by the fixed ordering costs (3,500 × $15) and get 52,500; multiply that number by 2 and get 105,000. Divide that number by the holding cost ($3) and get 35,000. Take the square root of that and get 187. That number is then Q.