What does EOQ actually tell me?

EOQ estimates the batch size where annual ordering cost and annual holding cost balance under a steady-demand assumption. It answers one narrow question well: how many units should I buy each time for routine replenishment if demand and cost assumptions stay reasonably stable.

Why do demand and holding cost need to be annual?

The classic EOQ formula uses annual demand and annual holding cost. If demand is monthly or holding cost is quarterly, convert both to an annual basis before using the calculator. Mixing time bases is the fastest way to get a misleading result.

What if my supplier has minimums, price breaks, or shipping tiers?

Then EOQ becomes a baseline, not the final policy. Supplier minimums, discount tiers, spoilage, taxes, shipping breaks, and similar real-world constraints can move the practical order quantity away from the mathematical optimum shown here.

How is this different from a reorder point calculator?

Reorder point answers when to order based on usage and lead time. EOQ answers how much to order each time once you are already planning routine replenishment. They solve different inventory decisions and often belong together, not in place of each other.

Economic Order Quantity (EOQ) Calculator

Choose how many units to order each time for a repeat inventory purchase. This EOQ calculator balances ordering cost and annual holding cost under a steady-demand assumption, then translates the answer into orders per year, operating cadence, and an optional comparison with your current batch size.

Currency

Annual demand

units/year

Ordering cost per order

$/order

Annual holding cost per unit

$/unit/year

Operating days per year

days

Current order quantity

units

Examples

Enter values above to see results

How It Works

Formula

Q^* = \sqrt{\frac{2DS}{H}}

N = \frac{D}{Q^*}

C_{\text{order}} = \frac{D}{Q^*} \times S

C_{\text{hold}} = \frac{Q^*}{2} \times H

C_{\text{total}} = C_{\text{order}} + C_{\text{hold}}

T = \frac{O}{N}

EOQ treats recurring replenishment as a tradeoff between two opposing costs. Smaller batches reduce average inventory on hand, so annual holding cost falls, but they force you to place more orders, so annual ordering cost rises. Larger batches do the opposite. The EOQ is the point where those two annual cost pressures meet.

Because the model uses annual demand and annual holding cost, every cost on the page must share the same currency and the same annual basis. Units can be pieces, cartons, kilograms, liters, or any other product unit, as long as annual demand and order quantity use that same unit consistently.

The calculator first solves $Q^* = \sqrt{2DS/H}$ for the economic order quantity. It then converts that batch size into orders per year, optional operating days between orders, and the annual ordering and holding cost implied by the EOQ.

If you enter a current order quantity, the calculator prices that current policy with the same annual ordering-plus-holding framework. That comparison is intentionally narrow: it is a steady-demand estimate, not a full procurement optimizer or forecasting engine.

Frequently Asked Questions

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Economic Order Quantity (EOQ) Calculator

How It Works

Frequently Asked Questions

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