Economic Order Quantity Calculator

How it works

1. 1Enter your annual demand in units, the fixed cost per order, and the annual holding cost per unit.
2. 2The calculator applies the EOQ formula — √(2DS/H) — to find the order size where ordering cost equals holding cost.
3. 3Review the optimal order quantity, orders per year, days between orders, and total annual inventory cost.

Use cases

• Retail and e-commerce businesses optimising purchase order frequency for fast-moving products.
• Manufacturers determining production run sizes to minimise combined setup and storage costs.
• Warehouse and supply-chain planners setting reorder policies to reduce excess inventory.

Frequently asked questions

What is the EOQ formula?

EOQ = √(2DS/H), where D is annual demand in units, S is the fixed cost per order, and H is the annual holding cost per unit. For example, D = 1 000, S = $50, H = $4 gives EOQ = √(100 000) ≈ 158 units.

Why does EOQ minimise cost?

At EOQ the annual ordering cost (D/Q × S) exactly equals the annual holding cost (Q/2 × H). Ordering smaller batches more often increases ordering cost; ordering larger batches less often increases holding cost. EOQ is the crossover point.

What assumptions does EOQ make?

EOQ assumes demand is steady and known, ordering and holding costs are constant, the full order arrives at once, and no stockouts are allowed. Seasonal demand or quantity discounts require more advanced models.