hi
I would like to ask your professional advice the reason why the denominator is different in EOQ model applied to Cash & Inventory.
in Cash, I don't understand why denominator of cash EOQ is able to apply percentage.
I tried to find the reason of the different formula but I can't find.
just should I memorize it as described in book?
Cash EOQ: Interest rate for current marketable securities or the opportunity cost of holding cash instead of current marketable securities (e.g. 5% or 10%)
Inventory EOQ: Carrying cost of one unit for the same time period used (e.g. U$ 100 or U$ 2,000)
------------------------------
Seung-Chul Lee
Accountant
Keonggi-Do
Korea, Republic of
------------------------------