Blake's OM523- JIT, EOQ, and EPQ

"A comparative analysis of inventory costs of JIT and EOQ Purchasing"

After reading this article, I got a sense of companies moving towards JIT to control their inventory costs. JIT is used by companies to lower inventory, lower holding costs, and improve quality. There are smaller companies who are unable to implement JIT who chose to stick with the traditional EOQ. These companies order several annual orders which normally have more inventory in the truck rather than JIT. This is because EOQ is more successful when looked at from an annual standpoint. JIT strives on receiving multiple small orders per week with short lead times. A company that uses EOQ takes the risk of having high holding and inventory costs, inventory spoilage, and taxes and insurance on purchased goods.

Looking closer at JIT, one can see that with high holding and ordering costs, JIT is the obvious choice for inventory managing.

"EOQ and EPQ with linear and fixed backorder costs"

In this article, I did not follow the formulas very well. It would be better written out instead of using formulas. I think the what the author was trying to say is when the fixed backorder cost is relatively large, or greater than the SQRT(2kh/rD) there should be no backorder. If its relatively small, some backordering could occur. The linear backordering cost will never be too large to make backordering expensive or costly.