📐EOQ Calculator

About this tool

Enter annual demand in units, the cost of placing one order and the cost of holding one unit for a year. You can also give a unit cost and a holding percentage instead. The calculator shows the economic order quantity, the number of orders a year, the days between orders and the total annual ordering and holding cost. A chart shows how both costs change with order size.

How economic order quantity works

Every order carries a fixed cost for admin, delivery and set-up, while every unit in stock costs money to store, insure and finance. Ordering often keeps stock low but runs up order costs. Ordering rarely does the opposite. The economic order quantity balances the two: EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year). With 12,000 units a year, 75 per order and 2.50 a year to hold a unit, the EOQ is about 849 units. That works out to about 14 orders a year, one every 26 days, for a combined cost of about 2,121. At the EOQ the ordering and holding costs are equal, and the total curve is flat near its minimum: ordering 20% more costs only about 1.7% extra. You can safely round to a pack or pallet size. Honest limits: the classic model assumes steady demand, a fixed price with no quantity discounts and no stock-outs. The reorder point calculator says when to order, the inventory turnover calculator tracks how fast stock moves and the break-even calculator handles pricing. How to calculate your break-even point (and what it doesn't tell you) is a related read.

Frequently asked questions