Log in with GoogleSteady demand
EOQ assumes steady demand. This form uses annual demand and annual holding cost. Do not enter seasonal demand against annual holding cost; annualise demand for the period, and treat the result as an approximation.
Free calculator
EOQ calculator
Find the economic order quantity (EOQ): the order size that keeps ordering cost and holding cost together as low as possible. Enter annual demand, the cost of placing an order and the cost of holding a unit for a year, in euros per unit or as a percentage of its cost.
Your results
Order 500 units at a time, about 20 times a year.
- Economic order quantity
- 500
- √(2 × annual demand × cost per order ÷ holding cost per unit)
- Orders per year
- 20
- Annual demand ÷ EOQ
- Days between orders
- 18.3
- 365 ÷ orders per year
- Total annual cost
- €2,000.00
- Ordering cost + holding cost
- Holding cost per unit per year
- €4.00
- Ordering cost per year
- €1,000.00
- Holding cost per year
- €1,000.00
EOQ is shown in whole units; costs use the unrounded value. Purchase cost is left out: it is the same at every order quantity when there are no quantity discounts. Demand is assumed steady through the year.
The start values are illustrative data.
Cost around the optimum
Total cost is lowest at the EOQ and rises slowly either side.
| Order quantity | Orders per year | Ordering cost | Holding cost | Total cost |
|---|---|---|---|---|
| 250 units (50% of EOQ) | 40 | €2,000.00 | €500.00 | €2,500.00 |
| 375 units (75% of EOQ) | 26.7 | €1,333.33 | €750.00 | €2,083.33 |
| 500 units (EOQ) | 20 | €1,000.00 | €1,000.00 | €2,000.00 |
| 625 units (125% of EOQ) | 16 | €800.00 | €1,250.00 | €2,050.00 |
| 750 units (150% of EOQ) | 13.3 | €666.67 | €1,500.00 | €2,166.67 |
| 1,000 units (200% of EOQ) | 10 | €500.00 | €2,000.00 | €2,500.00 |
How it works
Every step behind the numbers, worked through for the start values.
Illustrative data. An example product sells 10,000 units a year. Placing an order costs €50.00. Holding one unit for a year costs €4.00, which is 25% of its €16.00 unit cost.
| Step | Calculation | Result |
|---|---|---|
| EOQ | √(2 × 10,000 × €50.00 ÷ €4.00) | 500 units |
| Orders per year | 10,000 ÷ 500 | 20 |
| Days between orders | 365 ÷ 20 | 18.3 days |
| Ordering cost per year | 20 × €50.00 | €1,000.00 |
| Holding cost per year | 500 ÷ 2 × €4.00 | €1,000.00 |
| Total annual cost | €1,000.00 + €1,000.00 | €2,000.00 |
At the EOQ, ordering cost and holding cost are equal. Ordering 25% more at a time (625 units) costs €2,050.00 a year, 2.5% more. Ordering half as much (250 units) costs €2,500.00, 25% more.
Limits
EOQ is a starting point, with assumptions to check.
Cost per order
Count only costs that come with each order whatever its size: admin, goods-in, freight per shipment. Costs per unit belong in the unit cost.
Holding cost
Include the cost of the money tied up in stock, storage, insurance and shrinkage, per unit per year. Enter it in euros, or as a percentage of the unit cost.
Supplier terms
EOQ ignores minimum order quantities, price breaks and pack sizes. Round to a practical quantity: the cost table shows a small step either side of the EOQ costs little.
EOQ says how much to order. When to order is a separate question. Inventory Insights projects demand per product and works back from supplier lead time and a safety buffer to a reorder date, and warns you when that product’s reorder window opens.
EOQ questions, answered.
What is the EOQ formula?
EOQ = √(2DS ÷ H), where D is annual demand, S the cost per order and H the holding cost per unit per year. With 10,000 units a year, €50.00 per order and €4.00 holding cost: √(2 × 10,000 × 50 ÷ 4) = √250,000 = 500 units.
How do I work out the holding cost per unit?
Add what it costs to keep one unit for a year: the money tied up in it, storage, insurance and shrinkage. Enter that in euros per unit, or choose the percentage option and enter a share of the unit cost: 25% of a €16.00 unit is €4.00 a year.
What happens if I order more or less than the EOQ?
Total cost rises on both sides, but slowly. At the start values the EOQ costs €2,000.00 a year. Ordering 625 units costs €2,050.00 (2.5% more) and 250 units costs €2,500.00 (25% more).
How often should I order?
Divide annual demand by the EOQ for orders per year (10,000 ÷ 500 = 20), then 365 by that for the days between orders (18.3). The reorder point tells you when to place each order.
Does EOQ work for seasonal products or quantity discounts?
Not directly. It assumes steady demand and one price per unit. This form needs annual demand and annual holding cost; do not mix seasonal demand with annual costs. With price breaks, compare total annual cost at each break, including purchase cost.
Embed this calculator
Paste this script tag into your own page to show the calculator there, with the same maths and no sign-up. It fits the width of your page, resizes with the calculator and follows the visitor’s light or dark setting.
The script adds the calculator and a link to the full version under it. Keep the attribution link: it credits the calculator.
Know when to reorder every product, not only how much.
Inventory Insights projects demand per product and works back from supplier lead time and a safety buffer to a reorder date, and warns you when that product’s reorder window opens. Stock cover also feeds the labels your campaigns use, so products you cannot deliver lose priority.
Analyse your products for freeLog in with Google, no credit card
See how Inventory Insights works