Business & Marketing

Economic Order Quantity (EOQ) Calculator

How much should you reorder each time to keep inventory costs lowest?

By TheCalcTools Updated Formula checked and tested

Your numbers

Symbol only: enter amounts in the currency you pick.
$
$

Your results

Economic order quantity
Economic order quantity
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Orders per year
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Days between orders
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Annual ordering + holding cost
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Economic Order Quantity (EOQ) Calculator by TheCalcTools

How the Economic Order Quantity (EOQ) Calculator works

Enter yearly demand, the fixed cost of placing one order and the yearly cost of holding one unit.

EOQ balances the two so that total cost is lowest.

The calculator also gives order frequency and the cost at that optimum.

The formula

EOQ = √(2 × D × S ÷ H)Total cost = D ÷ Q × S + Q ÷ 2 × H

Worked example

Using the default values shown in the calculator:

Annual demand (units)12000
Cost per order$75
Holding cost per unit per year$3
  1. EOQ = √(2 × 12,000 × 75 ÷ 3) = 775 units.
  2. That means 15.5 orders a year, one every 23.6 days.
  3. Total ordering + holding cost = $2,324.

Result:

Economic order quantity775
Orders per year15.5
Days between orders23.6
Annual ordering + holding cost$2,324

Frequently asked questions

What does the model assume?

Constant demand, a fixed order cost, no stock-outs and instant delivery. Real operations add safety stock and lead-time effects.

What goes in holding cost?

Storage, insurance, spoilage, capital cost and obsolescence for one unit over a year.

Sources and further reading

Inventory Turnover CalculatorHow many times a year do you sell and replace your stock? Break-Even CalculatorWork out the sales volume where profit is exactly zero Profit Margin CalculatorEnter revenue and cost to see profit, margin and markup together

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This calculator gives estimates for information only. Check important results independently before you rely on them. See our disclaimer.