Economic Order Quantity (EOQ) estimates the order size that balances annual ordering cost and annual cycle-stock holding cost under the classic EOQ assumptions. Enter three positive values below; optional operational constraints help you compare the mathematical EOQ with a practical order quantity.
EOQ Calculator
EOQ = √(2DS ÷ H)
Optional operational constraints
How the EOQ calculation works
The classic model minimizes the relevant annual cost (D/Q)S + (Q/2)H. At the EOQ, annual ordering cost and annual cycle-stock holding cost are equal. Purchase cost is normally excluded when unit price does not change with order quantity because it does not affect the minimizing quantity.
Example: annual demand 10,000 units, ordering cost 50 per order, and annual holding cost 5 per unit gives EOQ ≈ 447.21 units. That implies about 22.36 orders per year and average cycle stock of about 223.61 units, before safety stock.
What should count as S and H?
Ordering cost (S) should represent costs that occur because an order is placed or a production run is set up. Holding cost (H) is the annual carrying cost per unit. If you only know an annual carrying-rate percentage, calculate H as unit value × annual carrying rate before using this calculator.
Avoid automatically putting the full freight bill, purchase price, or fixed overhead into S or H. Include a cost only when its behavior matches the EOQ model. Quantity discounts, freight breaks, capacity constraints, perishability and uncertain demand can require a different or extended model.
From EOQ to a practical order quantity
The mathematical EOQ may not be orderable. The optional MOQ and pack-size fields provide a practical comparison, but they do not prove that the adjusted quantity is globally optimal. When constraints materially change the quantity, compare the relevant annual cost at feasible alternatives and consider supplier price breaks.
Related inventory tools
After sizing an order, use the Safety Stock & Reorder Point Calculator to examine the timing decision. Use ABC Analysis to prioritize items by consumption value and the Inventory Turnover Calculator to review inventory efficiency.