EOQ Calculator
Find your economic order quantity — the order size that minimizes total inventory cost. Enter annual demand, ordering cost, and holding cost to get the optimal quantity, order frequency, and annual cost breakdown.
Enter your numbers
Your results
EOQ assumes constant demand, fixed ordering costs, and constant holding costs — a model, not a guarantee. Treat the result as a planning estimate.
How to use this calculator
Enter your annual demand in units, the cost of placing one order (paperwork, shipping, receiving), and the cost of holding one unit in stock for a year (warehouse space, insurance, capital tied up). The optimal quantity and cost breakdown update as you type.
Example: with annual demand of 1,200 units, a $50 ordering cost, and a $4 holding cost per unit, the EOQ is about 173 units — roughly 6.93 orders per year, with a total annual inventory cost of about $692.82.
How it works
EOQ = √(2 × D × S ÷ H), where D is annual demand, S is ordering cost per order, and H is holding cost per unit per year.
The magic of EOQ is that it balances two opposing costs. Order large quantities rarely, and you pay few ordering costs but high holding costs (inventory sits in the warehouse). Order small quantities often, and holding costs drop but ordering costs climb. At the EOQ point, annual ordering cost exactly equals annual holding cost — with the defaults above, each is about $346.41, and any other order size raises the total.
Supporting figures: orders per year = D ÷ EOQ, days between orders = 365 ÷ orders per year, annual ordering cost = orders × S, annual holding cost = (EOQ ÷ 2) × H.
Frequently asked questions
What is the EOQ formula?
EOQ = the square root of (2 × annual demand × ordering cost) ÷ holding cost per unit per year. Ordering more at once cuts ordering costs but raises holding costs; ordering less does the opposite. EOQ is the quantity where the two costs exactly balance.
What does EOQ stand for?
EOQ stands for Economic Order Quantity — the ideal number of units to order each time you restock so that your total annual inventory cost is minimized.
What are the assumptions behind EOQ?
Classic EOQ assumes demand is constant and known, ordering cost per order is fixed, holding cost per unit is constant, orders arrive instantly with no lead time, and there are no quantity discounts or stockouts. Real situations differ, so treat the result as a starting point.
Should I round the EOQ result?
Yes — this calculator rounds EOQ to whole units, since you cannot order a fraction of a unit. Rounding slightly changes the total cost, but the difference near the optimum is small because the total cost curve is flat around the EOQ point.