Minimum Order Quantities (MOQ)

This typically applies to raw material purchases but can apply to items such as software licence agreement bundles or server capacity. This can affect variable cost calculations by causing ‘steps’ rather than a straight correlation between orders, costs and revenue.

MOQ’s may differ by component so there will be varied stock levels for certain items, and inventory control will be required. This may also affect order taking, as one small order requiring a bulk purchase, most of which will then sit in stock, may not be economical if the stock is high cost/low usage – or is perishable.