Economic order quantity (EOQ) calculator
It helps you size supplier orders so you neither pay too many ordering fees nor pile up stock that is costly to hold.
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How to use it
- Enter annual demand, cost per order and holding cost per unit per year.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year). Annual cost = √(2 × demand × order cost × holding cost).
Example
Inputs: Annual demand = 12,000 units, Cost per order = 50, Holding cost per unit per year = 3. Result: Economic order quantity: 632.5 units; Orders per year: 18.97; Annual ordering plus holding cost: 1,897.37.
Limits and caveats
- It assumes steady demand all year and a unit price that does not change with quantity, so bulk discounts are ignored.
- Days between orders are based on a 365-day year.
Questions about this tool
What goes into the cost per order?
Anything paid once per order regardless of size: fixed freight charges, clearance and staff time to place and receive it.
How do I estimate holding cost per unit?
A common approach is a share of unit price, such as 20% a year covering rent, insurance, capital cost and damage.
Why are ordering and holding costs equal at EOQ?
It is a property of the model: at that quantity half the annual cost is ordering and half is holding.