Economic order quantity (EOQ) calculator
This EOQ calculator finds the economic order quantity: the order size that makes the sum of ordering costs and holding costs as small as possible. Enter your yearly demand, what it costs to place an order and what it costs to hold a unit for a year, and it returns the best order size, how many orders that means a year, how often to order and the total inventory cost.
It also draws the total-cost curve, so you can see how flat the bottom is, and compares the result with the order size you use today. Everything runs in your browser.
How to use the EOQ Calculator
- Enter annual demand in units and the cost of placing one order (admin, freight, handling).
- Enter your unit cost, then choose whether holding cost is a percentage of unit cost per year or an amount per unit.
- Optionally enter your current order size to see what it costs compared with the EOQ.
- Read the EOQ, the orders per year, the cost split and the curve. Pair it with the reorder point calculator to decide when to order.
EOQ Calculator features
Total-cost curve
Ordering, holding and total cost against order quantity, with the minimum marked.
Two ways to enter holding cost
A percentage of unit cost (typically 15–30% a year) or a fixed amount per unit per year.
Compare with today
See what your current order size costs per year against the EOQ.
The EOQ formula
EOQ = √(2 × D × S ÷ H), often called the Wilson formula. D is annual demand in units, S the cost of one order and H the holding cost per unit per year.
With D = 12,000, S = 50 and H = 4 (20% of a 20 unit cost): EOQ = √(2 × 12,000 × 50 ÷ 4) = √300,000 ≈ 548 units. That is about 21.9 orders a year, one every 16.7 days.
At the EOQ the yearly ordering cost (D ÷ Q × S) equals the yearly holding cost (Q ÷ 2 × H); here both are 1,095.45, so the total is 2,190.89. Ordering 1,000 at a time costs 12 × 50 + 500 × 4 = 2,600 a year.
What goes into holding cost and order cost
Holding cost is commonly quoted as 15–30% of unit cost a year, but your own storage fees and cost of capital are better than a rule of thumb. For landed unit cost, use the landed cost calculator.
| Input | Typical items |
|---|---|
| Cost per order (S) | Purchase-order admin, inbound freight and customs per shipment, receiving and put-away labour |
| Holding cost (H) | Cost of capital, warehouse or fulfilment storage fees, insurance, damage, obsolescence and shrinkage |
Limits to keep in mind
- The model assumes demand is steady and known, restocking is instant and prices do not change with quantity.
- Quantity discounts, minimum order quantities, pallet or carton multiples and shelf life can all move the best order size; round the EOQ to what your supplier ships.
- The curve is shallow near the minimum, so ordering 20% above or below the EOQ costs only about 2% more.
- It is a planning formula, not advice for a specific business.
EOQ Calculator FAQ
What is the EOQ formula?
EOQ = √(2DS ÷ H), where D is annual demand, S is the cost per order and H is the yearly holding cost per unit.
How do I calculate holding cost per unit?
Multiply the unit cost by your annual holding rate. A 20 unit cost at 20% a year gives H = 4. Or enter the amount per unit directly if you know your storage fee.
Why does EOQ balance ordering and holding cost?
Larger orders mean fewer orders (less ordering cost) but more stock on average (more holding cost). The total is lowest where the two are equal.
Should I order exactly the EOQ?
Not necessarily. The cost curve is flat near the minimum, so rounding to a full carton or pallet barely changes the total.
Does EOQ include purchase cost?
The EOQ ignores it because it is the same at any order size unless a discount applies. The calculator shows the total with and without purchase cost for reference.
When is EOQ not suitable?
For highly seasonal or unpredictable demand, perishable goods, or items with steep quantity discounts, use EOQ only as a starting point.