Cost and Effectiveness Impacts of Order Quantity Changes

by James W. Houghten

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A description of two methods for estimating the increased costs of setting a minimum reprocurement quantity of one year's worth of stock for Air Force Economic Order Quantity items whose annual issues are in the $1,000 to $10,000 category. One method requires that items be specified by their annual issue value; the other that they be specified both by annual demand rates and unit prices. Although more difficult and expensive to use, the second method is more accurate, particularly for items with low annual demand rates.

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