From the course: Excel Supply Chain Analysis: Solving Inventory Problems

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Determine increased cost of constrained purchases

Determine increased cost of constrained purchases - Microsoft Excel Tutorial

From the course: Excel Supply Chain Analysis: Solving Inventory Problems

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Determine increased cost of constrained purchases

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- [Instructor] When you calculate an economic order quantity, you identify how many items you should order to minimize order costs. However, you can't always order that exact amount. Suppliers might require you to order in increments of say 30 and your job is to find the lowest cost quantity that you can order while meeting their policy. I'll show you how to do that in this movie. My sample file is 0105 constrained and you can find it in the chapter one folder of the exercise files collection. In my workbook, I have two worksheets. The first one is called constrained and that's where we'll work. In it, I have calculated the economic order quantity for items with the parameters that you see in cells B3 through B7. And you can see that the EOQ or Q star is 219.09. However, it turns out that we can't order exactly that amount. The supplier requires us to order in increments of 30 and you can see the table that I've…

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