For example, suppose that we buy 2,000 units each year for $2 each. A clerk is paid
$8.075 for the time it takes to place the order, and there is a $1 delivery charge per order.
Therefore cost per order is $9.075. The cost of capital is 8%, which comes to 16 cents per
unit held per year (8% x $2 price per unit = $.16) and other cost related to storage,
insurance and warehousing come to $2.84 per year. The total carrying cost is therefore
$3 per unit. For this example:
Please replace xxx's with the values			Price or Purchase Cost per Unit			xxx
in the example above. The implicit interest			Number of Units Purchased Each Year (N) =			xxx
rate for a discount for prompt payment			Cost to Carry One Unit Per Year (C) =			xxx
will be calculated automatically.			Cost to Place One Order (O)=			xxx
			EOQ
Inventory Carrying Cost = Cost to Carry One Unit x ------------- =					#VALUE!
				2
			Number of Units
			Purchased for Year
Inventory Ordering Cost = Cost to Make One Order x --------------------------------- =					#VALUE!
				EOQ
Total Inventory Cost = Purchase Cost + Carrying Cost + Ordering Cost =					#VALUE!
EOQ = Square Root of ((2 x O x N)/ C) =					#VALUE!