EOQ Calculator
Economic Order Quantity for inventory optimization
Economic Order Quantity Calculator
Optimize your inventory management by calculating the ideal order quantity that minimizes total inventory costs, including ordering and holding costs. Make data-driven purchasing decisions.
EOQ
447
units per order
Annual Orders
22.36
orders per year
Total Cost
$2,236.07
per year
Fixed cost per purchase order (admin, shipping, receiving)
Economic Order Quantity
447
units per order
Orders per Year
22.36
Days Between Orders
11
Annual Inventory Costs
Potential Savings: $13.93/year
By switching from 500 to 447 units per order
Lead Time Demand
280
units during lead time
Safety Stock
120
units buffer
Reorder Point
400
place order at this level
Inventory Cycle Visualization
Economic Order Quantity (EOQ) is the optimal order quantity that minimizes total inventory costs, which include ordering costs and holding costs. It's a fundamental formula in inventory management, first developed by Ford W. Harris in 1913.
The EOQ model assumes constant demand, fixed ordering costs, and constant lead time. While these assumptions rarely hold perfectly in practice, EOQ provides a useful starting point for inventory planning.
H = Unit Cost × Holding Rate (%). The square root function creates the characteristic U-shaped total cost curve.
- Stable Demand: Products with consistent, predictable demand
- Known Costs: When ordering and holding costs are quantifiable
- Independent Items: Items not tied to production schedules
- Standard Products: Non-perishable, non-seasonal items
Ordering Cost
Purchase order processing, receiving, inspection
Decreases with larger order quantities
Holding Cost
Storage, insurance, obsolescence, capital cost
Increases with larger order quantities
Total Cost
Sum of ordering and holding costs
Minimized at EOQ
Stockout Cost
Lost sales, production delays, customer dissatisfaction
Managed through safety stock
- •EOQ is a guideline, not a rule - adjust for practical constraints
- •The total cost curve is flat near EOQ - small variations are acceptable
- •Review and update EOQ calculations when costs or demand change significantly
- •Consider supplier minimums and quantity discounts in practice
- •Use safety stock to handle demand variability
- ✗Underestimating holding costs (include opportunity cost of capital)
- ✗Ignoring demand variability and seasonality
- ✗Not updating calculations when costs change
- ✗Applying EOQ to perishable or trendy products
- ✗Ignoring supplier constraints (minimum order quantities)