EOQ Calculator (Economic Order Quantity)
Find the order quantity that minimizes total ordering + holding cost — the classic EOQ, with the cost curve explained.
EOQ = √(2 × annual demand × order cost ÷ holding cost per unit). At the EOQ, annual ordering cost equals annual holding cost — the total-cost curve's flat bottom, so being roughly right beats being precisely wrong.
Sources & references
- Harris EOQ model (1913); standard operations-management texts
- Inventory carrying-cost methodology
Inventory formulas use the model and inputs you provide — they are decision aids, not guarantees. EOQ, safety-stock and reorder math rest on assumptions (demand pattern, lead-time stability, cost accuracy) that rarely hold perfectly; treat results as a starting point and adjust to your data, service-level target and risk tolerance.
The Economic Order Quantity answers the oldest question in inventory: order a lot at once (few orders, but big stockpiles costing money to hold) or order little and often (low stock, but constant ordering costs)? EOQ finds the order size that minimizes the SUM of the two — the square root of (2 × annual demand × cost per order ÷ holding cost per unit per year). This calculator computes it, plus how many orders that means per year, the days between them, and the total cost at the optimum.
About EOQ Calculator (Economic Order Quantity)
The formula's elegance is that at the EOQ, annual ordering cost exactly equals annual holding cost — the two curves cross at the total-cost minimum. That also reveals EOQ's most useful property: the total-cost curve is FLAT near the bottom, so ordering 20% off the EOQ raises total cost by only a couple of percent. Being roughly right is fine; the value of EOQ is escaping the genuinely wrong order sizes (ordering yearly when you should order monthly, or vice versa), not hitting a magic number to the unit. Treat the inputs honestly and EOQ becomes a real planning tool. Cost-per-order should capture the true cost of placing and receiving an order (admin, inspection, setup); holding cost per unit per year should include capital cost, storage, insurance, obsolescence and shrinkage — often 15–30% of unit value, which surprises people who count only warehouse rent. Where quantity discounts or constrained order multiples apply, EOQ is the starting point you adjust from. Pair it with the reorder-point and safety-stock calculators to turn 'how much' into a complete 'when and how much' policy.
How to use EOQ Calculator (Economic Order Quantity)
- 1Set each input — annual demand (units/year), cost per order (setup/ordering), holding cost per unit per year — using your own figures.
- 2The estimate recomputes instantly as you type; no submit button, no waiting.
- 3Review the line-item breakdown to see how each component contributes to the total.
- 4Click “Copy quote” to paste the itemised result into an email, quote or audit note.
Why use EOQ Calculator (Economic Order Quantity)?
- ✓Itemised line-by-line breakdown, not just a single opaque total
- ✓Copy-ready output for emails, quotes and audit notes
- ✓Recomputes live as you type — compare scenarios in seconds
- ✓Free and private — nothing you enter leaves your browser
Frequently asked questions
What is the EOQ formula?+
EOQ = √(2DS ÷ H), where D is annual demand (units), S is the cost per order (setup/ordering cost), and H is the holding cost per unit per year. The square root reflects the trade-off: doubling demand doesn't double the optimal order size, it multiplies it by √2. At the resulting EOQ, total annual ordering cost equals total annual holding cost, which is the minimum of their sum.
What costs go into holding cost per unit?+
More than storage: the capital cost of money tied up in inventory (often the biggest piece), warehouse space, insurance, taxes, obsolescence and spoilage, shrinkage, and handling. It's commonly expressed as a percentage of unit value — frequently 15–30% per year. Counting only rent badly understates it and pushes EOQ toward over-ordering. Get H roughly right and the EOQ is useful; use only warehouse cost and it isn't.
How accurate does EOQ need to be?+
Roughly right is enough — that's EOQ's quiet superpower. The total-cost curve is flat near the optimum, so being 20–25% off the calculated EOQ raises total cost by only ~2%. So don't agonize over the third decimal of holding cost; use EOQ to land in the right order of magnitude (weekly vs monthly vs quarterly ordering) and to escape clearly-wrong policies. Then round to practical order multiples or discount breaks without much penalty.
What are EOQ's limitations?+
It assumes steady, known demand, a fixed ordering cost, constant holding cost, instant replenishment (no lead-time variability — that's what safety stock handles separately), and no quantity discounts. Real demand is lumpy and lead times vary, so EOQ is a baseline, not a mandate. For discounts, compare total cost at EOQ versus at each discount break; for variable demand, pair EOQ (how much) with reorder point and safety stock (when, and how much buffer). It's the foundation, not the whole policy.
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