EOQ Calculator
Calculate the economic order quantity that balances ordering cost against holding cost.
- Orders per year
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- Days between orders
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- Total yearly ordering and holding cost
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What is the EOQ Calculator?
The economic order quantity calculator finds the order size that minimises the combined yearly cost of placing orders and holding stock. Enter annual demand, cost per order and holding cost per unit per year to get the quantity and order frequency.
How it works
EOQ equals the square root of two times annual demand times ordering cost, divided by holding cost per unit per year. Orders per year equal demand divided by EOQ. Total yearly cost is orders times ordering cost plus half the EOQ times holding cost.
How to use it
- Enter annual demand in units.
- Enter the cost of placing one order.
- Enter the yearly holding cost for one unit.
- Read the order quantity and orders per year.
EOQ Calculator — FAQ
What goes into ordering cost?
Everything spent each time you place an order: purchase processing, freight, inspection and handling, but not the price of the goods.
What is holding cost per unit?
The yearly cost of keeping one unit in stock, such as storage, insurance, spoilage and the cost of money tied up.
Is EOQ always the best quantity?
It is a starting point. Supplier minimums, discounts and shelf life may justify a different order size.