Correcting students misconceptions Carrying costs are higher than what students expect. Many companies believe that annual carrying costs exceed 30% of the stock purchase cost. Teaching tips Students with a quantitative background will be interested in the derivative of the EOQ model. EOQ determines the order quantity (Q) that minimises the total purchase order and carrying costs 2 DP QC DP Q + Using differential calculus to obtain a minimum of the TCfunction with respect to Q, d 0 d 2 DP C TC Q Q − = 2 2 C DP Q 2 DP Q C = (Note also that the second derivative is positive)
