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is the ROP greater than the EOQ? How should this situation be handled?

is the ROP greater than the EOQ? How should this situation be handled?
Math   Statistics-And-Probability   
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Answer #1

ROP = Reordering Point
EOQ = Economic Order Quantity

Yes.ROP can be greater than EOQ.

the EOQ is the ideal amount to reorder, so if the ROP is higher you will be carrying excess inventory.

The reason why the ROP is larger than EOQ is that monthly change in demand.

For example, An forecast for 2019 January was that demand is only 10.but in may demand will go to 100.also since the first 3 months has a demand less than the EOQ excess stock should present on each time they reorder which would close the ap of lead time and deliver their product to their customers on time & on budget.

I would recommend keeping 10% extra inventory to keep up and with customer demand & improve customer satisfaction.

By doing so this should solve the problem of ROP larger than EOQ.

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