Economic Order Quantity (EOQ) Calculator

The economic order quantity is the order size that minimises your total annual inventory cost. It balances two opposing costs: ordering cost, which rewards big infrequent orders, and holding cost, which rewards small frequent ones. Order more than the EOQ and you carry too much stock; order less and you pay too often to reorder. At the EOQ those two costs are exactly equal, and the combined cost is at its lowest. It answers the question "how much should I order each time?"

The classic Wilson EOQ formula is EOQ = √( (2 × D × S) ÷ H ), where D is annual demand in units, S is the cost to place one order, and H is the cost to hold one unit in stock for a year. For example, with 12,000 units of annual demand, a 50 ordering cost, and a 3 holding cost, the EOQ is √((2 × 12,000 × 50) ÷ 3) = √400,000 ≈ 632 units per order. This calculator computes that for you and shows every intermediate step.

You need three numbers: annual demand in units, the cost to place one order, and the cost to hold one unit for a year. Put them into EOQ = √((2 × demand × ordering cost) ÷ holding cost). Enter them above and the optimal order quantity calculator returns the EOQ instantly, along with how many orders that means per year, how many days each batch lasts, and the total annual cost you are minimising.

Ordering cost is everything it takes to place and receive ONE order, whatever its size: freight, customs, purchasing admin, inspection, and receiving labour. Holding cost is what it costs to keep one unit in stock for a YEAR: warehouse space, the capital tied up in the stock, insurance, obsolescence, and shrinkage. Holding cost is often quoted as a carrying-cost rate — 20–30% of the item's value per year is typical — which is why this tool lets you enter it as a flat figure or as a percentage of unit cost.

It is a mathematical property of the model, and a useful sanity check. As you increase order size, annual ordering cost falls (fewer orders) while annual holding cost rises (more average stock). The total is lowest exactly where the two curves cross — and at that crossing point they are equal. So when this calculator shows your annual ordering cost and annual holding cost as roughly the same number, that confirms you are at the optimum.

No. A lower unit price is tempting, but ordering far above the EOQ to qualify means carrying more stock, and the extra holding cost can outweigh the price saving. The right test is total annual cost — purchase plus ordering plus holding — at the discount quantity versus at the EOQ. Enter the bulk quantity and its discounted price above and the calculator runs that comparison and tells you which option costs less per year, and by how much.

Not on its own. The basic EOQ depends only on annual demand, ordering cost, and holding cost — the unit purchase price is not in the formula, because total purchase cost (demand × price) is the same however you split the orders. That is why the "total annual inventory cost" output excludes purchase cost. Unit price only matters when you are comparing a quantity discount, where a lower price changes the all-in total cost — which is exactly the comparison the discount check performs.

Once you have the EOQ, orders per year is annual demand ÷ EOQ, and the order cycle is 365 ÷ orders per year — the number of days a batch lasts. In the worked example, 12,000 units ÷ 632 ≈ 19 orders a year, or roughly one every 19 days. EOQ tells you HOW MUCH to order; the cycle hints at WHEN, but to set a precise reorder trigger you also need lead time and safety stock — use the restock calculator alongside this one.

That is normal — the EOQ is rarely a clean number. Because the total-cost curve is flat near the bottom, rounding to a practical order size barely changes your cost. Round up to a full case, pallet, container, or your supplier's minimum order quantity. If the EOQ comes out below one unit, your holding cost is very high relative to your ordering cost; double-check both inputs, then order the smallest practical batch.

EOQ assumes steady, predictable demand, a constant ordering cost, and a constant holding cost. It is ideal for stable, fast-moving products. It fits poorly for highly seasonal items, products with short shelf lives, fast-declining or one-off SKUs, or situations with severe storage caps — there a single EOQ can leave you over- or under-stocked at the wrong time. For those, plan order by order and rely on a reorder point with safety stock instead.

Yes. EOQ is currency-agnostic — the quantity comes out the same in any currency as long as your ordering cost and holding cost are entered in the same one. Type your costs in your local currency and the calculator shows every monetary output (annual ordering cost, holding cost, total cost, and any discount saving) in that same currency. There is no conversion and no hidden assumption about dollars.

They answer different questions. The EOQ is HOW MUCH to order each time — the quantity that minimises total cost. The reorder point is WHEN to order — the stock level at which you place a new order, equal to lead-time demand plus safety stock. You need both: the EOQ sets your order size, the reorder point triggers the order so stock arrives before you run out. This calculator handles the EOQ; pair it with a restock or reorder-point calculator for the timing.