Read the formula and its variables
Demand, order cost and annual unit holding cost are positive under the deterministic continuous-quantity model.
| Input | Meaning |
|---|---|
| D | Annual demand in units |
| K | Fixed cost per order |
| h | Annual holding cost per unit |
Inspect a stated example
D = 10,000, K = 50 and h = 2 give approximately 707.1068 units.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
Minimum quantities, integer packs, lead-time uncertainty and discounts can require a different feasible solution.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.