EOQ Calculator
Find the order size that minimizes total inventory cost.
The optimal order size
Every time you reorder stock there is a cost, and every unit you hold has a carrying cost. The economic order quantity balances the two to minimize total inventory cost.
With annual demand of 10,000 units, a 50 order cost, and a 2 holding cost per unit, the EOQ is about 707 units per order. Ordering in that size minimizes the combined ordering and holding expense.
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Frequently Asked Questions
What is EOQ?
The economic order quantity — the order size that minimizes the combined cost of ordering and holding inventory.
What is the formula?
The square root of two times annual demand times the order cost, divided by the holding cost per unit per year.
Why does it matter?
Ordering too often raises order costs; ordering too much raises holding costs. EOQ finds the sweet spot.
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