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EOQ Calculator

Optimal order size to minimize total cost.

EOQ:

What is EOQ?

EOQ (Economic Order Quantity) is the order size that minimizes the total cost of ordering and holding inventory for a single item with relatively stable demand.

EOQ formula

The classic EOQ formula is:
EOQ = √((2 × D × S) / H)

  • D = demand (units per year)
  • S = ordering cost per order
  • H = holding cost per unit per year

EOQ example

Example: Annual demand (D) = 10,000 units, cost per order (S) = 50, and holding cost per unit per year (H) = 2.

EOQ = √((2 × 10,000 × 50) / 2) = √(500,000) ≈ 707 units. This means the most economical order size is about 707 units per order.

When should you use this EOQ calculator?

  • When demand for an item is relatively stable over time.
  • When ordering and holding costs are known and predictable.
  • When you manage a single product or SKU at a time.
  • When you want to reduce total inventory cost without running complex models.

How this EOQ calculator helps your business

  • Reduce total inventory cost by balancing order and holding costs.
  • Avoid overstocking and free up working capital.
  • Lower the risk of stockouts caused by guessing order quantities.
  • Support more data-driven purchasing decisions.

EOQ Calculator – Frequently Asked Questions

  • What is EOQ in simple terms?

    EOQ is the ideal order size that minimizes the combined cost of placing orders and holding inventory.

  • What inputs do I need for EOQ?

    You need annual demand, the cost per order, and the holding cost per unit per year.

  • Does EOQ work for all products?

    EOQ works best for items with predictable demand and stable lead times. Highly seasonal or very volatile items may need more advanced models.

  • Is EOQ useful for small businesses?

    Yes. EOQ is a simple but powerful way for small businesses to choose order sizes based on cost instead of guesswork.