Economic Order Quantity Calculator

This simple Economic Order Quantity (EOQ) calculator can be used for computing the economic (optimal) quantity of goods or services a firm needs to order. The calculator also offers a visualization of the EOQ model in graphic form.

To utilize this calculator, simply fill in all the fields below and then click the "Calculate EOQ" button.

EOQ Calculator

units

per order

%

per unit

What is Economic Order Quantity?

Economic Order Quantity is the ideal size of order that reduces the cost of holding adequate inventory and ordering costs to a minimum. This is one of the world's longest used classical models for production scheduling.

EOQ is calculated on the basis of several assumptions, which include:

  • - the ordering cost is always the same
  • - the purchase price is always the same
  • - demand remains constant and so does lead time
  • - order costs do not fluctuate depending on size of order
  • - holding costs are reliant on average inventory
  • - there is only one product involved in the calculation

The formula below is employed to calculate EOQ:

Economic Order Quantity (EOQ) = (2 × D × S / H) 1/2

Where:

D represents the annual demand (in units),

S represents the cost of ordering per order,

H represents the carrying/holding cost per unit per annum.

Example:   If a company predicts sales of 10,000 units per year, the ordering cost is $100 per order, and holding cost is $50 per unit per year, what is the economic order quantity (in units) per order?

EOQ = ( 2 × Annual Demand × Ordering Cost / Holding Cost ) 1/2

EOQ = ( 2 × 10,000 × $100 / $50 ) 1/2

EOQ = ( 40,000 ) 1/2 = 200 units per order.

You may also be interested in our Weighted Average Cost of Capital Calculator

Rating: 3.4/5 (21 vote)