EOQ Calculator

EOQ in inventory planning

The economic order quantity model is a classic inventory planning tool that helps you choose an order size that minimizes the tradeoff between ordering and holding. Ordering costs include the work to create a purchase order, approve the buy, schedule the receipt, and handle payment. Holding costs represent the annual cost of carrying inventory, including warehousing, capital tied up in stock, shrink, and obsolescence. When those two forces are balanced, the EOQ gives a stable, repeatable order quantity that reduces overall cost for a steady-demand item.

In practice, EOQ is most useful for SKUs with predictable demand and stable lead times. The model assumes that demand is relatively constant across the year and that you can place an order that arrives all at once. While real supply chains are more complex, EOQ remains a solid baseline that helps planners standardize replenishment policies and compare ordering strategies. If you have meaningful demand variability or long, uncertain lead times, you should pair EOQ with a safety stock policy and a reorder point policy. EOQ answers the question "how much should I order?" while safety stock and reorder point answer "when should I order?"

This calculator also converts the EOQ into an order frequency and an order interval. Those outputs are operationally helpful because they translate an abstract unit quantity into a practical cadence you can plan for on a calendar. For example, if the EOQ is 1,200 units and you sell 24,000 units per year, you will place roughly 20 orders per year, or one order every 12 to 13 working days. If that cadence does not fit supplier constraints or warehouse capacity, you can revisit your ordering cost estimate, your holding cost estimate, or your practical lot-size constraints.

The EOQ model is cost-focused, not service-focused. That means it does not directly address service level, fill rate, or peak season risks. Use it as a foundation, then layer on safety stock, lead time variability, and supplier minimums to build a policy that is both cost aware and service resilient. Because this tool is client-side, you can test multiple scenarios quickly and keep sensitive inventory costs private.

Formula

EOQ: EOQ = sqrt((2 * D * S) / H)

Orders per year: D / EOQ

Order interval (days): Working days per year / (D / EOQ)

Annual ordering cost: (D / EOQ) * S

Annual holding cost: (EOQ / 2) * H

Example calculation

Suppose annual demand is 24,000 units, the ordering cost is $75 per order, and holding cost is $2.50 per unit per year. EOQ is:

EOQ = sqrt((2 * 24000 * 75) / 2.5) = sqrt(1,440,000) = 1,200 units.

Orders per year are 24000 / 1200 = 20, so the order interval is roughly 250 / 20 = 12.5 working days. Annual ordering cost is 20 * 75 = $1,500, and annual holding cost is (1200 / 2) * 2.5 = $1,500. The EOQ balances those two costs.

FAQs

What does EOQ measure?

EOQ estimates the order size that minimizes the combined annual cost of ordering and holding inventory.

Does EOQ include demand variability?

Classic EOQ assumes steady demand. Use a safety stock policy separately to buffer variability.

Is this calculator private?

Yes. All calculations run locally in your browser with no data sent to a server.

Can I use any currency or unit labels?

Yes. Currency and unit labels are for display, and calculations scale with your inputs.

How it works

This calculator uses the classical EOQ model to balance annual ordering and holding costs. Inputs are validated in the browser, and the results are computed instantly without sending any data to a server.

Disclaimer

EOQ results are estimates based on the inputs provided and standard assumptions. Validate outcomes against supplier constraints, minimum order quantities, and service level policies.