The EOQ function help file states this
Not run:
#Classical EOQ model
#Given demand d=8000 items per year; set up cost k=12000; and holding cost h=0.3
#per unit we find that the optimal solution is to order 25298 units every 3.2
#months with a total variable cost of $7589.5
End(Not run)
Given that the required inputs are
d
Demand per unit time.
k
Ordering or fixed cost per order.
h
Holding cost per unit of product.
b
Shortage penalty cost per unit (default:0)
Surely the EOQ calculation is requiring 25298 units to be ordered per 3.2 cycles of the time period specified by d (years in this case) not months? or have I missed something?
otherwise you will be ordering ~25,000 units per quarter to meet an annual demand of only 8000 units.
Many thanks