How Much More To Pay For Per Unit Rather Than MOQ?

Ideally, minimum order quantity (MOQ) should be the same as Economic Order Quantity (EOQ). However, many small companies lack the space to store container loads of the same products ate goal. For space-scarce cities like Singapore, companies opt to pay more per unit of products to save space. Most of the companies though, still choose to buy at MOQ quantities. Sacrificing space and consequently, operational effectiveness for unit cost savings. 

This leads to capital locked into inventory that can otherwise be earning interest in a bank. Precious space is used up. Worse still, if inventory becomes obsolete, it is a complete waste of money, space, effort  and IT system account for it.

How do you decide how much more to pay per unit of product until it becomes too expensive, that you rather buy more?

Well the answer lies in calculating the purchasing and holding cost to the current MOQ, and finding the current holding cost penalty you are paying. By increasing the unit cost of product, the purchasing cost increases and thus EOQ, or MOQ now in this case decreases, as it becomes more expensive to buy relative to holding the inventory. The increase in unit cost compared to holding coat makes it worthwhile for the buyer to pay more for each unit until the it becomes too expensive relative to the holding cost.