Q3. What is EOQ, and how we get the lowest buying cost to explain? Also, explain what constraints can off the EOQ model and what results cannot be calculated. 5 Marks Curve for total cost of holding and setup Min Total cost Holding cost curve Set-up(order) Cost curve Annual Cost Optimal order quantity Q = Number of piece per order *Q* = Optimal number of piece per order (EOQ) *D=Annual demand in units for the inventory item d = Daily demand rate, or usage rate S = Setup or ordering cost for each order OH = Holding and carrying cost per unit per year t = Length of production run in day P = Daily production rate SCM LOrder lead time