Minimum Order Quantity Verse EOQ

I’m not sure about the calculations in Acumatica, so I’ll wait for someone else to give feedback on that.  

But conceptually, the best way to differentiate between these 2, is that MOQ is an external constraint set by the supplier and EOQ is an internal calculation based on the cost to the business. When do you buy and how much do you by, to make it most economical for your business(AKA your Replenishment Cycle). This EOQ or RC will usually factor in the demand for the product, the cost of purchasing it, and the cost of holding it, to strike a balance.

As an example: 

• Fast moving expensive items that take up substantial space might have lower EOQs(shorter RCs) This would increase the order frequency, but tie up less cash and save space in the warehouse.
• Fast moving inexpensive items that don’t take up much space might have bigger EOQs(longer RCs). This would decrease order frequency and increase service levels without putting strain on the warehouse.

Of course there are many different combinations of those 3 factors to consider, so it can get complicated.

PS: To top it off, some suppliers provide “EOQs” as opposed to MOQs, which are more like incentives to buy more rather than imposing a constraint. Things like buying to a certain value or volume or units, that will activate a price break. This could then also be factored into your internal EOQ calculation. 

The replenishment Method from a Stock Item’s Inventory Replenishment tab is what determines what calculation is done when inventory levels reach or drop below the set Reorder Point.

Fixed Reorder Qty method: The EOQ is recommended. No other calculations are done.

Min./Max method:

1. Calculate the difference between the Max and current stock position (Qty on Hand + Qty on Supply - Qty on Demand) so as to order enough to exactly reach the maximum replenishment amount
2. Increase that value to the Minimum order Quantity, if less
3. Increase that value to the next round Lot size, if applicable
4. Decrease that value to the Maximum Order Quantity, if greater

So in your example, hitting a reorder point of 10 on a stock item with a minimum order of 50 and a Max Replenishment of 20 will go through the following steps (assuming the Min./Max replenishment method and no other factors):

1. 20(max) - 10(current)  = 10, so start with 10
2. 10 < 50(min order), so increase to 50
3. No lots specified, still 50
4. No maximum order quantity specified, so still 50

EOQ does not factor into this calculation. If you were to change the replenishment method to Fixed Order Quantity, then the calculation that would happen when you reached the reorder point is:

1. EOQ

The final quantity from the calculation is what gets populated by default into the Prepare Replenishment (IN508000)’s Qty to Process column. Note that this field can be edited afterwards without regard for any of the replenishment parameters.

Most of this was found through my own extensive testing as we tried to wrap our heads around which parameters did what. I wrote up a document on how the IN508000 and IN508500 appear to work, if you’re interested in some unofficial documentation.

Thank you so much.  Your answer is so helpful to me.  I appreciate your time to write your helpful answer.