EOQ Calculator
The economic order quantity, or EOQ, is the order size that balances two costs: placing orders often, and keeping stock on the shelf. Enter how many units you use each year and the two costs, and the order size follows.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
EOQ is the square root of two times yearly demand times the cost per order, divided by the yearly holding cost for one unit.
The model assumes steady demand and fixed costs. Storage limits, discounts and supplier minimums can change the right size, so treat the result as a starting point.
Worked example
Using 5,000 units a year, an order size of 500 balances ordering and holding costs, which means about 10 orders a year.
Questions
What are holding costs?
They include storage space, insurance, handling and the money tied up in stock. Add them up for one unit over a year.
Does the answer have to be a whole number?
Round it to a size your supplier can deliver, such as a full case or pallet.
What if demand changes?
Run the calculation again with the new yearly figure. The order size moves with demand, so it is worth checking each year.
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