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Economic Order Quantity (EOQ)

Find the ideal reorder quantity that minimizes total inventory costs — balancing ordering frequency against storage and holding expenses.

EOQ Calculator

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Optimal Order Quantity (EOQ)

Number of Orders per Year

Time Between Orders

Total Annual Cost

Cost Analysis

Ordering Cost

Carrying Cost

Purchase Cost

Total Cost

Cost Breakdown:

  • • At optimal EOQ, ordering cost equals carrying cost
  • • Ordering Cost = (D/Q) × S =
  • • Carrying Cost = (Q/2) × H =
  • • Purchase Cost = D × Unit Cost =

EOQ Formula & Information

EOQ Formula

EOQ = √(2DS/H)
Where:
D = Annual demand
S = Ordering cost per order
H = Carrying cost per unit per year

Related Formulas

  • • Number of orders per year: N = D/EOQ
  • • Time between orders: T = EOQ/D × 365 days
  • • Total cost: TC = (D/Q)S + (Q/2)H + D×C

Key Assumptions

  • • Demand is constant and known
  • • Lead time is constant and known
  • • No quantity discounts
  • • No stockouts allowed
  • • Ordering and carrying costs are constant

Benefits

  • • Minimizes total inventory costs
  • • Balances ordering and carrying costs
  • • Provides optimal order frequency
  • • Improves cash flow management
  • • Reduces storage requirements

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