Computing the Break-Even Point in Supply Chain Management
Materials can be purchased either in Economic Order Quantity (EOQ) fashion or Just-In-time (JIT) fashion. When all the companies purchase their materials in JIT fashion from its up-stream material suppliers, a supply chain is formed. The decision as to whether or not to switch from EOQ to JIT for purchasing an item is difficult to be made, especially when price discount has to be considered. JIT purchasing may not always be successful even though plants that adopted JIT operations can capitalize on physical space reduction. Hence the objectives of this study are to expand on two new concepts that focus on, namely, the annual holding capacity of an inventory facility.