Under Calculation settings you enter the values used to calculate the EOQ according to Wilson's formula or based on the number of orders / year.
Ordering Cost (Purchase)
Here you enter the administrative cost per order to purchase this part. If you leave this field empty, the EOQ for purchased parts will be calculated based on Orders / year. Entered in the company currency.
Ordering Cost (Manufacturing)
Here you enter the administrative cost per order to manufacture this part. If you leave this field empty, the EOQ for all parts except purchased parts will be calculated based on Orders / year. Entered in the currency SEK. (However, the program cannot take the setup cost from the preparation into consideration, since it is already included in the formula as a part of the standard price).
Ordering Cost (Subcontract)
Here you add an ordering cost for subcontract. The ordering cost is multiplied by the number of subcontracts of which the part consists. Samples of specific ordering costs for subcontracts are: ordering, ordering freight, report subcontract dispatch and supplier invoice management.
Interest
Here you enter the holding cost that Wilson's formula uses to calculate the EOQ. Entered in percent.
Round-off
Here you enter value that you want to round-off the calculated EOQ with. The EOQ will then be rounded-off using that value.
Orders / Year
Here you enter how many orders per year are made for the parts you selected. If no value is entered here, the EOQ calculation will only use Wilson's formula. If there are values in this field as well as in the Ordering cost field, both calculations are used, using the calculation from Orders / year as the lowest value for the EOQ.
Max EOQ (Days Consumption)
Here you can enter a maximum value for the EOQ, in the unit "balance in days". E.g. enter "250" if the EOQ should not be more than 1 year's consumption. This value is then multiplied with the part's daily pace and is compared with the calculated EOQ. The Wilson formula does not have that kind of built-in limit.
Min EOQ (Days Consumption)
Here you can enter a minimum value for the EOQ, in the unit "balance in days". For example, enter "5" if the EOQ can not be less than 1 week's consumption. This value is then multiplied with the part's daily pace and is compared with the calculated EOQ. The Wilson formula does not have that kind of built-in limit.
Current Daily Pace (Max./Min. EOQ)
If you have activated the setting Show Annual Budget/Volume and EOQ with Current Daily Pace?, under Requirements planning under the Inventory tab in the Settings procedure, the setting Current daily pace (max./min. EOQ) is available. If you activate this setting, the part's s current daily pace is used instead of the daily pace in calculations with Max. EOQ (days consumption) and Min. EOQ (days consumption).
Add Setup Cost
Here you enter if the setup cost should be added to the ordering cost. For manufacturing parts it is the setup cost according to the calculation. For purchased parts it is setup price - purchase. If you choose to add setup cost, a field will be activated to select cost factor alternative.
Part Value Including Setup Cost
Here you indicate if the price/value for the manufactured part should include the setup cost. You can then decide how to apply this option, and whether to use it in combination with the Add setup cost alternative.
The prerequisite is that the EOQ calculation needs the setup cost to add the ordering cost. Calculations that calculate the setup cost need the EOQ to calculate a unit price, including a setup price. This is a difficult situation since we do not know the EOQ yet.
In the beginning, you can calculate a range of parts that do not have an EOQ defined using EOQ = 1. This gives you a part price based on e.g. EOQ = 1 and where the setup cost is probably very high (the price is high as well).
Then you should run the Calculate EOQ procedure using the Add setup cost option. The setup cost will then be correct according to the calculation and the EOQ will be calculated with a proper ordering cost. In this case, you should not use the Part value including setup cost option, since the price is too high.
You can then perform a new calculation using the new calculated EOQ. After that, run another Calculate EOQ using the Part value including setup cost option
If you perform additional calculations and Calculate EOQ runs, you can further refine the approximation process.
Cost Factor Alternative
This option is activated if you have selected the Add setup cost or Part value including setup cost options. Here you enter the cost factor alternative that is valid for the calculated setup cost.