The Economic Order Quantity (EOQ) is the ideal order size that minimizes total inventory costs, balancing the ordering cost (costs related to placing and receiving orders) and the holding cost (costs related to storing inventory). The EOQ model is a fundamental concept in inventory management and is derived from the following formula:
EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS
where:
* DDD = demand rate (units per period),
* SSS = cost per order,
* HHH = holding cost per unit per period.
The EOQ model assumes constant demand and lead time, and it does not consider discounts for bulk purchases. By minimizing both ordering and holding costs, EOQ contributes to overall cost efficiency in inventory management, which is essential for whole-life asset management in balancing long-term expenses.

Calculating Inventory Turnover (Stock Turn)
As with a typical turnover ratio, inventory turnover details how much inventory is sold over a period. To calculate the inventory turnover ratio, cost of goods (COGS) is divided by the average inventory for the same period.1 Cost of Goods Sold ÷ Average Inventory or Sales ÷ Inventory In this exercise, the stock turn equal to sales divided by inventory, or 1,000,000:250,000 = 4.
Reference: CIPS study guide page 131
LO 2, AC 2.3

Decommissioning is the process of safely retiring equipment from use. It involves steps such as cleaning, dismantling, and responsibly disposing of the asset, especially if it contains hazardous materials. Whole-life asset management includes decommissioning as a key phase, ensuring that assets are disposed of cost- effectively and in compliance with environmental standards.