Inventory Control in Production Planning – The most important functions of inventory (stock) control are as follows :

1. to have good stock control system,

2. to have technical responsibility for the state of materials,

3. to run the stores effectively.

In inventory control, the economic ordering quantity (EOQ) is obtained by the quantity whose procurement cost is equal to inventory carrying cost.

If A is the total items consumed per year, P is the procurement cost per order and C is the annual inventory carrying cost per item, then the most economic ordering quantity is given by