Economic Order Quantity Calculator
Find the order size that minimises total ordering and holding costs.
About the Economic Order Quantity Calculator
Enter yearly demand, the fixed cost of placing an order and the cost of holding one unit for a year. The calculator gives the economic order quantity, how many orders a year and how often, and the total yearly cost, with a chart of cost against order size.
Ordering often means high ordering costs; ordering rarely means holding lots of stock. The EOQ balances the two, assuming steady demand and fixed costs. At the EOQ, yearly ordering cost equals yearly holding cost.
The formula
EOQ = √(2 × demand × order cost ÷ holding cost)
Worked example
12,000 units a year, 50 per order, 2.40 to hold a unit for a year
- EOQ = √(2 × 12,000 × 50 ÷ 2.40) = 707 units
- About 17 orders a year, every 22 days
- Total ordering and holding cost: 1,697
Questions people ask
What's in holding cost?
Storage, insurance, spoilage and the cost of money tied up, often 20–30% of unit cost a year.
What about safety stock?
EOQ sets order size; reorder points and safety stock handle demand variability.