
172 THE LEAN ANTHOLOGY
THE IMPACT OF COST ESTIMATES
ON PURCHASING DECISIONS
Economic Order Quantity (EOQ)
The EOQ is the best (typically, most eco-
nomical) amount of something that should
be ordered at one time. As we learned in
“Peter Goes Shopping” in Chapter 14,
EOQ is a measurement that represents a
judgment—a determination as to the opti-
mal amount of a process input, product,
or component material that should be
ordered at one time. It involves an assess-
ment that balances the cost of holding
inventory against the cost of obtaining it,
which is sometimes described as the setup
cost. This judgment should be made in
Lean Takeaways
A Lean cu ...