EOQ Calculator (Economic Order Quantity)

Work out the economic order quantity (EOQ): the order size that gives the lowest combined cost of placing orders and holding stock. Enter your annual demand, the cost of one order and your holding cost.

Your ordering figures

1. Demand and ordering cost
The cost of placing one order is everything that does not change with the order size: raising the purchase order, receiving, inspection, putting away, and any fixed delivery charge. Use your own currency for every cost.
2. Holding cost How do you know your holding cost?
Holding cost covers storage space, handling, insurance, shrinkage and expiry, and the money tied up in stock. Many businesses use 15% to 30% of the unit cost per year as a starting point. Replace it with your own figure when you have one.
3. Reorder point and current order size - optional
With a lead time, the reorder point is the demand during the lead time plus the safety stock. With your current order quantity, the result shows how much more or less it costs than the best quantity.

Result

Best order quantity (EOQ)-Fill in the fields to see the result.
Planning estimate. The EOQ model assumes steady demand, a fixed cost per order, a holding cost that grows in direct proportion to stock, no quantity discounts, and a supplier that delivers on time. The costs shown are ordering and holding only. They do not include the purchase price. Check supplier minimums, pack sizes, pallet quantities and shelf life before you set an order size.

Printed from warehousecalc.com. Results are planning estimates; confirm them before you rely on them.

How EOQ is calculated

EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year). Ordering more often means more order costs but less stock to hold. Ordering less often means the opposite. The EOQ is the order size where the two yearly costs are about equal and their sum is lowest.

The calculator rounds to whole units by comparing the two neighbouring quantities on total cost. If you know your supplier lead time, it also gives a reorder point: daily demand × lead time, plus any safety stock.

What the EOQ model assumes

Demand is steady and known, the cost per order is fixed, holding cost grows in direct proportion to the stock held, there are no quantity discounts, and deliveries arrive on time. The costs shown are ordering and holding costs only, not the purchase price. Real orders are also limited by supplier minimums, pack sizes, pallet quantities and shelf life, so treat the result as a planning starting point. The total cost is flat near the best quantity, so a nearby round number, such as a full pallet, usually costs very little extra.

Worked example: EOQ for 12,000 units a year

A product sells 12,000 units a year. Placing one order costs 50, and holding one unit in stock for a year costs 2.

  • EOQ: √(2 × 12,000 × 50 ÷ 2) = 774.6, rounded to 775 units per order.
  • Orders per year: 12,000 ÷ 775 = 15.5, about one order every 23.6 days.
  • Ordering cost per year: 15.48 × 50 = 774.19.
  • Holding cost per year: 775 ÷ 2 × 2 = 775.
  • Total ordering and holding cost: 1,549.19 a year.

With a supplier lead time of 10 days and a safety stock of 100 units, the reorder point is 32.88 units a day × 10 days + 100 = 428.77, rounded up to 429 units.

Common questions about EOQ

What counts as the cost of placing one order?

The costs that occur each time you order, whatever the quantity: raising and approving the purchase order, delivery charges that are fixed per order, receiving and checking the delivery, and processing the invoice.

What is holding cost?

The cost of keeping one unit in stock for a year: storage space, the money tied up in stock, insurance, and losses from damage or expiry. If you do not know it per unit, enter the unit cost and a holding rate as a percentage, and the calculator works it out.

Does EOQ include safety stock?

No. EOQ is the size of each order. Safety stock is a buffer against late deliveries and higher demand, and it is added to the reorder point, not to the order quantity.

What if my supplier has a minimum order quantity or sells in full pallets?

Use the nearest quantity the supplier accepts. The total cost changes little close to the EOQ, so rounding to a pack or pallet quantity usually costs very little extra. Enter it as your current order quantity to see the difference.

Related tools and guides. Work out the buffer to add to the reorder point with the Safety Stock Calculator, and check how fast stock moves with the Inventory Turnover Calculator. See all calculators.

Scroll to Top