EOQ Calculator
Find the order quantity that minimizes total inventory cost — economic order quantity, orders per year, and an interactive curve of ordering vs holding costs.
Fixed cost of placing one order: admin, shipping, receiving.
Storage, capital, insurance, shrinkage — often 20–30% of unit cost.
— total cost-- ordering cost-- holding cost
EOQ = √(2 × demand × order cost ÷ holding cost) — the quantity where ordering and holding costs cross. Order less often and holding costs balloon; more often and ordering costs do. Feed the result into the reorder point calculator to know when to place each order.
Frequently asked questions
What is the EOQ formula?
EOQ = √(2DS ÷ H), where D is annual demand in units, S is the fixed cost of placing one order, and H is the cost of holding one unit for a year. It finds the order size where total ordering costs and total holding costs are equal — the minimum of the total cost curve.
How do I estimate holding cost?
Sum storage, capital cost (what the cash could earn elsewhere), insurance, shrinkage, and obsolescence. A common shortcut is 20–30% of the unit cost per year — a $20 product typically costs $4–6 a year to keep on the shelf.
What are the limitations of EOQ?
The classic model assumes steady demand, fixed costs, and no quantity discounts or shelf-life limits. Treat the output as a strong baseline, then adjust for supplier minimums, bulk discounts, seasonality, and perishability.
How does EOQ relate to the reorder point?
They answer different questions: EOQ is how much to order; the reorder point is when to order. Together with safety stock they form the complete replenishment policy for a SKU.