All Member Open Forum

Hello, 

Can someone share an effective method for calculating MRO (Maintenance, Repair, and Operations) Inventory Holding costs and the average cost of a Purchase Order (PO)? Should we adhere to any industry standard for this? I know these components play a crucial role in the EOQ (Economic Order Quantity) formula. We've relied on "loose estimates" so far, but now I'm eager to explore this topic further to ensure precision. Any insights or thoughts on this would be greatly appreciated. Thank you 

Brian. 

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Brian O'Donnell
Manager of Maintenance Reliability
American Eagle Outfitters
Weatherly PA
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Why do you want to use EOQ?  EOQ was never meant to be used for MRO inventory. I would recommend using inventory turns as a true measure of how effective your inventory strategy is.  Of course, do not use the value of critical spares in the calculation.

Hello, 

Can someone share an effective method for calculating MRO (Maintenance, Repair, and Operations) Inventory Holding costs and the average cost of a Purchase Order (PO)? Should we adhere to any industry standard for this? I know these components play a crucial role in the EOQ (Economic Order Quantity) formula. We've relied on "loose estimates" so far, but now I'm eager to explore this topic further to ensure precision. Any insights or thoughts on this would be greatly appreciated. Thank you 

Brian. 

------------------------------
Brian O'Donnell
Manager of Maintenance Reliability
American Eagle Outfitters
Weatherly PA
------------------------------

We primarily employ EOQ (Economic Order Quantity) as a reference to determine the optimal quantity of a stock part to order when it hits the replenishment point. 

Why do you want to use EOQ?  EOQ was never meant to be used for MRO inventory. I would recommend using inventory turns as a true measure of how effective your inventory strategy is.  Of course, do not use the value of critical spares in the calculation.

Hello, 

Can someone share an effective method for calculating MRO (Maintenance, Repair, and Operations) Inventory Holding costs and the average cost of a Purchase Order (PO)? Should we adhere to any industry standard for this? I know these components play a crucial role in the EOQ (Economic Order Quantity) formula. We've relied on "loose estimates" so far, but now I'm eager to explore this topic further to ensure precision. Any insights or thoughts on this would be greatly appreciated. Thank you 

Brian. 

------------------------------
Brian O'Donnell
Manager of Maintenance Reliability
American Eagle Outfitters
Weatherly PA
------------------------------