EOQ Calculator (Economic Order Quantity)
Calculate your economic order quantity (EOQ). Enter annual demand, ordering cost, carrying rate, and unit cost to find the order size that minimises total cost.
The economic order quantity is the order size that minimises the total of ordering cost and inventory holding cost. Order too little and you pay to order too often; order too much and you tie up cash in stock.
How it works
EOQ balances the fixed cost of each order against the cost of carrying the resulting average inventory. It rises with demand and ordering cost, and falls as holding cost rises.
The formula
EOQ = sqrt( (2 x annual demand x ordering cost) / (carrying rate x unit cost) ). The carrying rate x unit cost is the annual cost to hold one unit.
Worked example
With annual demand 20,000, ordering cost 125, carrying rate 21%, and unit cost 34: EOQ = sqrt((2 x 20,000 x 125) / (0.21 x 34)) = about 837 units.
Frequently asked questions
What is EOQ used for?
It sets a cost-efficient reorder quantity for stable, repeatably ordered items. Pair it with the reorder point to know both how much and when to order.
When does EOQ not apply?
Skip it for just-in-time items, highly variable demand, or when big quantity discounts change the unit cost by order size.
Should I order exactly the EOQ?
No. Round to a practical case, pallet, or minimum-order multiple. EOQ is a target, not a rigid quantity.
Related tools
This is a planning estimate. Results depend on your inputs and assumptions; confirm against your own data before ordering.
- Demand is constant and known.
- Ordering cost and unit cost are constant (no quantity discounts).
- The full order arrives at once and stock is drawn down linearly.