%201.svg){kind=small}
Latest posts
Download resources
Optimal order quantity: definition & important aspects for buyers
.jpeg)
Optimal order quantity in a nutshell:
The optimum order quantity describes the most economically advantageous order quantity at which the sum of order and storage costs is minimized. For purchasing, this key figure enables efficient warehousing while minimizing the total costs of procurement.
Example: An automotive supplier determines an optimum order quantity of 1,550 units for an A article with an annual requirement of 24,000 units, order costs of €100 per order and storage costs of €2 per unit/year, resulting in 15.5 orders per year.
Contents
Optimal order quantities in purchasing controlling
What is the optimum order quantity?
The optimum order quantity is a central concept in inventory management and procurement planning. It describes the order quantity at which the total costs from ordering and inventory costs are minimized. The aim is to find a balance between frequent, smaller orders and less frequent, larger orders in order to optimize costs and increase efficiency in purchasing.
Core components of the optimum order quantity
- Order costs: Costs incurred for every order, regardless of the order quantity.
- Warehousing costs: Costs for the storage of goods, including capital commitment, storage space and insurance.
- Annual requirement quantity: Total quantity of an article that a company requires within a year.
- Optimization equation: Application of the Andler formula to calculate the optimum order quantity.
Significance for purchasing
Determining the optimum order quantity has a significant impact on procurement processes. It enables buyers to reduce costs and optimize the use of resources. By applying this concept, excess stock can be avoided and supply bottlenecks minimized, leading to more efficient warehousing and leaner procurement processes.
- Cost reduction: Minimization of storage and ordering costs through optimal order quantity planning.
- Process optimization: more efficient order cycles and reduction of administrative work.
- Resource management: Better utilization of storage capacities and financial resources.
Application of the optimum order quantity
The optimum order quantity is calculated using the Andler formula in order to minimize the total costs of ordering and inventory costs. By determining this quantity, a balance can be achieved between order frequency and stock levels.
Calculation example
Given:
- Annual requirement(B): 10,000 units
- Order costs per order(Kf): 100 €
- Storage cost rate(h): 20 % of the unit price
- Unit price(p): 50 €
Calculation of storage costs per unit:
Kh = p × h = 50 € × 0.20 = 10 €
Andler formula for calculating the optimum order quantity:
Qopt = √((2 × B × Kf) / Kh)
Used with the values:
Qopt = √((2 × 10,000 × 100 €) / 10 €)
Qopt = √((€2,000,000) / €10)
Qopt = √200,000
Qopt ≈ 447.21
Result: The optimum order quantity is around 447 units.
Interpretation: To minimize total costs, the company should order approximately 447 units each time. This leads to an optimal balance between ordering and storage costs.
Evaluation and strategic findings
✓ Critical success factors
→ Precise cost data: Exact recording of order and storage costs for reliable calculations
→ Demand forecasts: Precise forecast of annual demand as the basis for calculation
→ System support: integration of the calculation into existing ERP or procurement systems
⚠ Challenges and limitations
→ Dynamic markets: fluctuating prices and delivery times make long-term planning difficult
→ Storage capacities: Physical restrictions can limit the optimal order quantity
→ Minimum order quantities: Supplier specifications can prevent implementation of the calculated quantity
Future trends and implications:
"The integration of AI and real-time data will revolutionize traditional order quantity optimization."
→ Automatic adjustment of parameters through machine learning
→ Dynamic optimization based on real-time data
→ Predictive analytics for demand forecasts
→ Integration of sustainability factors in the calculation
Conclusion on the optimum order quantity
The optimum order quantity is an indispensable tool for efficient inventory management and strategic procurement. By systematically applying the Andler formula, companies can minimize their overall costs and optimize processes. Despite certain restrictions due to market dynamics and practical limitations, the concept provides a solid basis for cost-efficient procurement decisions, especially when combined with modern technologies such as AI and real-time data. The key to success lies in the precise database and flexible adaptation to changing conditions.
