Economic Order Quantity Calculator
Find the order quantity that minimises the combined cost of ordering and holding stock.
About Economic Order Quantity Calculator
EOQ balances two opposing costs: ordering often is expensive in order costs, ordering rarely is expensive in holding costs. The square-root form means the optimum is flat near the minimum, so being 20% away from EOQ costs only a few per cent more. Because the cost curve is flat around the optimum, EOQ is best used as a sanity check on order size rather than a figure to follow to the unit.
Formula
Economic Order Quantity
EOQ = √(2 × annual demand × order cost ÷ annual holding cost per unit)
- order cost
- Administrative and inbound cost of placing one order regardless of size
- holding cost per unit
- Unit cost times the annual holding rate
Worked example
With the default values below, Economic Order Quantity Calculator returns Economic Order Quantity of 1,633. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Annual demandminimum 1 units
- 44,000 units
- Cost to place one orderminimum 0.01
- 120
- Cost per unitminimum 0.01
- 18
- Annual holding cost rateaccepts 0–100 %
- 22 %
Results
- Economic Order Quantity
- 1,633 units
- Orders per Year
- 26.94
- Total Ordering and Holding Cost
- $6,466.65
- Days Between Orders
- 13.5 days
- Annual Holding Cost per Unit
- $3.960
Step by step
- 1Values used
- 2Economic Order Quantity
- 3Economic Order Quantity= 1,633 units
- 4Orders per Year= 26.94
- 5Total Ordering and Holding Cost= 6,466.65
- 6Days Between Orders= 13.5 days
- 7Annual Holding Cost per Unit= 3.960
Assumptions and limits
- The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Economic Order Quantity calculated?
EOQ = √(2 × annual demand × order cost ÷ annual holding cost per unit) EOQ balances two opposing costs: ordering often is expensive in order costs, ordering rarely is expensive in holding costs. The square-root form means the optimum is flat near the minimum, so being 20% away from EOQ costs only a few per cent more.
Why does Economic Order Quantity matter?
Because the cost curve is flat around the optimum, EOQ is best used as a sanity check on order size rather than a figure to follow to the unit.
What values do I need to enter?
This calculator takes 4 inputs: Annual demand, Cost to place one order, Cost per unit, Annual holding cost rate. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.