Economic Order Quantity Calculator
The order quantity that minimises ordering plus holding cost, and how much it saves against what you order now. The cost curve is remarkably flat near the optimum, so being twenty percent off the EOQ costs about two percent, which is worth knowing before anyone argues about the inputs.
Also called: economic order quantity, optimal order size calculator.
1,225 units an order, which is 19.6 orders a year at a total cost of $97,979.59. Ordering 4000 at a time costs 175000 a year against 97979.59 at the EOQ, so moving to it saves about 77020.41. At 1470 units, twenty percent above the optimum, the total cost rises only 1.7%. The curve is flat around the minimum, so round to a case or pallet quantity rather than arguing about the holding rate.
Total cost by order quantity
Hover or drag for valuesCost at different order sizes
| Order quantity | Orders a year | Ordering cost | Holding cost | Total | Above optimum |
|---|---|---|---|---|---|
| 612 | 39.2 | $97,980 | $24,495 | $122,474 | 25% |
| 919 | 26.1 | $65,320 | $36,742 | $102,062 | 4.2% |
| 1,225 | 19.6 | $48,990 | $48,990 | $97,980 | 0% |
| 1,531 | 15.7 | $39,192 | $61,237 | $100,429 | 2.5% |
| 1,837 | 13.1 | $32,660 | $73,485 | $106,145 | 8.3% |
| 2,449 | 9.8 | $24,495 | $97,980 | $122,474 | 25% |
How this is calculated
Ordering in large batches means few orders and a large average stock; ordering in small ones reverses both. EOQ is where the two costs cross. The square root has two consequences worth understanding. The answer is insensitive to its inputs, so doubling the ordering cost raises the quantity by only about forty percent, and the total cost curve is flat around the minimum, so a quantity twenty percent away from the EOQ costs roughly two percent more than the optimum. That flatness is the practical result: round the EOQ to a case or pallet quantity without guilt, and do not spend a week estimating the holding rate to two decimals.
the square root is why the answer is insensitive: doubling the order cost raises the quantity by only forty percent- D
- Annual demand
- S
- Cost of placing an order
- H
- Holding cost a unit a year
Method and limits
What it assumes
- Steady demand and a constant lead time, which is the classical model and rarely the real one.
- No quantity discounts, which change the answer materially when they exist.
What it deliberately does not model
- Quantity discounts, perishability and storage limits all override the EOQ.
- Demand that is seasonal or lumpy breaks the constant-rate assumption the model rests on.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- How precise does the holding cost need to be?
- Not very. The cost curve is flat near the optimum, so an order quantity twenty percent off the EOQ costs about two percent more. Getting the order of magnitude right is what matters.
- What if my supplier has a minimum order?
- Then the minimum governs where it is above the EOQ, and the page shows the cost of that constraint rather than an optimum you cannot order.