Economic Order Quantity (EOQ) is the optimal order batch size that minimizes the sum of inventory ordering costs (freight, customs handling, transport challans) and holding costs (warehouse rent, bank interest on working capital, damage, and obsolescence). Ordering too little inflates delivery costs; ordering too much locks up working capital in dead stock.

In Nepal, typical inventory holding costs range between 18% and 25% per year. This includes commercial bank working capital loan interest (9%–13%), warehouse rental and electricity (4%–6%), insurance (1%–2%), and risk of damage, theft, or seasonal obsolescence (3%–5%).

Safety stock is buffer inventory kept to protect against supplier delays (e.g. Birgunj border customs hold-ups, landslide blockages along Narayanghat-Mugling highway) and sudden demand spikes. Higher lead time variance requires a larger buffer to guarantee 95%–99% service levels.

As order quantity increases, the number of orders per year decreases (reducing annual delivery and administrative costs), but average inventory held increases (raising storage and capital interest costs). The EOQ formula finds the exact point where these two opposing costs intersect.

Yes. ByaparOS tracks real-time stock balances across warehouse bins. When inventory hits the Reorder Point, the system automatically drafts a Purchase Order with the pre-configured EOQ batch size and notifies your procurement team via in-app and WhatsApp alerts.