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Economic Order Quantity Calculator
Calculate the optimal Economic Order Quantity (EOQ) to minimize total inventory holding and ordering costs, with annual cost curve breakdowns.
🔒 This tool runs entirely in your browser. Your files are never uploaded to a server.
Optimal Order Quantity (EOQ)
Total Annual Inventory Cost
Inventory Operational Summary
| Metric | Value | Description |
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How it works
- Enter your total annual product demand in units.
- Provide the fixed cost incurred each time you place a purchase order.
- Enter the annual holding (carrying) cost to store one unit of inventory for one year.
- The calculator determines the optimal order batch size, number of orders per year, and combined inventory expenses.
The formula
The classic Wilson EOQ formula is defined as:
EOQ = √((2 × D × S) / H)
Where:
D = Annual Demand (units)
S = Fixed Order / Setup Cost ($)
H = Annual Holding Cost per Unit ($)
Example: For D = 10,000 units, S = $50/order, and H = $4/unit/yr: EOQ = √((2 × 10,000 × 50) / 4) = √(250,000) = 500 units per order.
FAQ
What is Economic Order Quantity (EOQ)?
Economic Order Quantity (EOQ) is the ideal order quantity a company should purchase to minimize total inventory costs, including holding costs, shortage costs, and order setup costs.
Why does total cost reach a minimum where holding cost equals ordering cost?
Ordering costs decrease per unit as batch size increases (fewer total orders placed), while holding costs increase linearly with larger batches (more inventory stored). The EOQ mathematical balance point occurs exactly where annual ordering cost equals annual holding cost.
What assumptions are built into the classic EOQ model?
The classic model assumes constant, predictable annual demand, fixed ordering costs, instantaneous replenishment without stockouts, and constant holding costs per unit without volume price discounts.
What costs should be included in holding and order costs?
Order cost includes administrative processing, shipping, handling, and inspection fees per batch. Holding cost includes warehouse storage space, insurance, capital opportunity cost, spoilage, and depreciation per unit per year.
How we compare
| Feature | Online Tool Store | ERP modules | Manual formula |
|---|---|---|---|
| Instant live calculation without login | ✓ | ✗ | ✓ |
| Full operational metrics (intervals, cycles) | ✓ | ✓ | ✗ |
| Runs 100% in private browser tab | ✓ | ✗ | ✓ |
Model supply chain purchasing decisions instantly without spreadsheet errors or software licenses.