EOQ Calculator
Calculate the optimal economic order quantity to minimize inventory holding and ordering costs. Free EOQ formula calculator for supply chain planning.
What Is Economic Order Quantity (EOQ)?
EOQ is the optimal order size that minimizes total inventory costs by balancing ordering costs against holding costs. It is a foundational model in supply chain and inventory management.
EOQ Formula
$$EOQ = \sqrt{\frac{2 \times D \times S}{H}}$$
Where $D$ is annual demand, $S$ is the fixed cost per order, and $H$ is the annual holding cost per unit.
How to Use EOQ Results
Ordering at the EOQ level reduces the combined cost of placing orders and storing inventory. Combine this with our Ending Inventory Calculator and Inventory Period Calculator to manage stock levels end to end.
Frequently Asked Questions
What assumptions does the EOQ model make?
EOQ assumes constant demand, fixed ordering cost per order, fixed holding cost per unit, and immediate replenishment. Real supply chains may need safety stock on top of EOQ.
What is holding cost?
Holding cost includes warehouse rent, insurance, obsolescence, and the opportunity cost of capital tied up in unsold inventory.
Should I always order exactly EOQ units?
EOQ is a benchmark. Packaging constraints, supplier minimums, and demand variability may require rounding, but ordering near EOQ still reduces total cost.
How does EOQ relate to reorder point?
EOQ sets how much to order. Reorder point sets when to order based on lead time and demand. Both are needed for a complete replenishment policy.
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