Video narration
Too much pantry stock ties up money; too little causes stockouts. It is three decisions. Ask three questions: how much to buy, how fast it moves, and how much backup. EOQ-economic order quantity-answers the first. It is the refill size balancing ordering cost against holding cost. The formula is square root of two D S over H: D is demand, S ordering cost, and H holding cost. Inventory turnover answers the second: how fast inventory is used or sold over time. It equals cost of goods sold divided by average inventory. Higher is not always better if shelves go empty. Safety stock answers the third. It is extra inventory for demand spikes or supplier delays. The amount depends on demand variability, supplier reliability, and desired service level. Together, they answer different questions. Think pantry: EOQ sets refill size, turnover shows movement, and safety stock protects against delays.