ABC analysis and implementation of eoq model in a manufacturing industry: A case study

Inventory is considered as a significant investment affecting the financial decisions of an industry. This paper represents the conduction of ABC Analysis, determination and optimization of total variable inventory costs for the raw material inventory of an Orthoses manufacturing company through the implementation of basic Economic Order Quantity (EOQ) model. The different costs associated with the raw material inventory, that is, ordering costs and holding costs, have also been calculated for fifteen major raw material items of the manufacturing firm. The total variable inventory costs determined by implementation of basic EOQ model have been compared with the existing costs and a net saving of 13.65% have been found in the total variable inventory costs.