Economic Order Quantity and Other Procurement Terms

October 26th, 2022

So is that different than net landed cost.


Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc

In procurement bets practices, ever evolving terminologies can get you into trouble if you don’t understand the slight differences or assume terms have the same meaning.

The landed cost is the total cost of acquiring and shipping a product. It is the total price paid by a retailer till they receive the goods. The common charges involved are shipping costs, customs fees, insurance, and overheads.

The Economic Order Quantity is the size of an order at which the totally procurement and inventory carrying cost is at the lowest possible threshold. The formula can be used to determine production levels or order interval lengths and is used by large corporations around the world. The components for the formula include the demand for the year, cost to place a single order, and the cost to hold one unit of inventory for a year.

SafeSourcing is a Procure to Pay SaaS based provider of a number of e-Procurement solutions and associated white glove services that are part of our SaaS offered SafeSourceIt™ eSourcing suite. These include but are not limited to Safe Contract™, SafePO™, SafeDocument™ and our SafeSourceIt™ Global Supplier Database that includes over 557,000 vendor/suppliers.

To learn more, please contact a SafeSourcing customer services associate.



If you thought this page is useful to your friend, use this form to send.
Friend Email
Enter your message