How do you optimize EOQ and reorder point models with multiple suppliers and lead times?
If you are in charge of materials management, you know how important it is to balance the costs and benefits of ordering and holding inventory. You may also use EOQ and reorder point models to determine how much and when to order from your suppliers. But what if you have multiple suppliers with different lead times and prices? How do you optimize your inventory decisions in this complex scenario? In this article, we will show you how to apply some simple techniques to improve your EOQ and reorder point models with multiple suppliers and lead times.
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Consider total cost of ownership:Evaluate suppliers by calculating all associated costs, not just purchase price. This holistic view ensures you select the most economical option, balancing quality and cost effectively.### *Adapt to lead times:Adjust your EOQ and reorder points based on each supplier’s lead time. This proactive approach helps prevent stockouts and excess inventory, ensuring smooth operations.