Economic Order Quantity (EOQ) Calculator
Find the order size that balances ordering cost against holding cost and minimises your total annual inventory cost.
Quick answer
Economic order quantity is the order size that minimizes total ordering plus holding cost: EOQ = square root of (2 x annual demand x cost per order / holding cost per unit per year).
Economic Order Quantity (EOQ) Calculator
Economic Order Quantity
—
Orders per Year
—
Days Between Orders
—
Annual Ordering Cost
—
Annual Holding Cost
—
Total Annual Cost (ordering + holding)
—
Annual Cost at Different Order Sizes
| Order size | Orders / year | Ordering cost (₹) | Holding cost (₹) | Total cost (₹) | vs. EOQ |
|---|
Assumptions & method
- EOQ = √(2 × D × S ÷ H), with D = annual demand, S = cost per order and H = holding cost per unit per year.
- Orders per year = D ÷ Q. Days between orders = operating days ÷ orders per year. Annual ordering cost = (D ÷ Q) × S. Annual holding cost = (Q ÷ 2) × H.
- When H is given as a percentage, H = unit cost × rate. Average inventory is taken as half the order size.
- Assumes constant demand, fixed ordering and holding costs, instant replenishment, no stockouts and no quantity discounts.
- The purchase price of the goods is not included in the total, because it is the same for every order size. Minimum order sizes and pack sizes are not applied.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
What is the economic order quantity?
Ordering stock involves a trade-off. Big, infrequent orders mean fewer order costs but more inventory sitting in storage. Small, frequent orders keep holding costs low but multiply the cost of placing orders. The economic order quantity is the point where those two costs are equal, which is also where their sum is smallest. It depends on annual demand, the cost of one order and the annual cost of holding one unit. This calculator shows the EOQ, how often you would order, the days between orders and a table and chart of total cost at order sizes around the optimum.