EOQ Calculator
Find the order size that keeps ordering and storage costs as low as possible.
- Orders per year
- 15.8
- Days between orders
- 23
- Annual ordering + holding cost
- $1,897.37
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How to use the EOQ calculator
- Enter how many units you expect to sell in a year.
- Enter the fixed cost of placing one order: admin time, supplier order fees, inbound freight booking and receiving.
- Enter what it costs to hold one unit for a year: storage, insurance, shrinkage and the cost of cash tied up. Order the EOQ each time.
EOQ formula
This is the classic Wilson EOQ model. It assumes steady demand and no quantity discounts, so round it to your supplier's carton size or MOQ.
Example
A shop sells 12,000 units a year. Each order costs 60 to place and holding one unit for a year costs 2.50. EOQ is √(2 × 12,000 × 60 ÷ 2.5) = 759 units, about 16 orders a year or one every 23 days, for a total ordering and holding cost of about 1,897.
What EOQ tells you
Big orders cut ordering costs but raise storage costs; small orders do the opposite. EOQ is the point where the two are equal, which is where their total is lowest.
When to adjust the EOQ
If your supplier has an MOQ, offers volume discounts or ships in full cartons, compare the total cost at those quantities too. Pair EOQ with a reorder point so you know when to place each order.
Frequently asked questions
What is EOQ?
Economic order quantity is the order size that minimises the total cost of ordering and holding stock.
What goes into holding cost?
Storage, insurance, damage and shrinkage, and the cost of the cash tied up in stock. Many businesses use 20% to 30% of the unit cost per year.
What if my supplier's MOQ is higher than the EOQ?
Order the MOQ and check the total cost; a lower unit price can outweigh the extra holding cost.
Does EOQ tell me when to order?
No. Use a reorder point for timing and EOQ for how much to order.
Is EOQ useful for small online shops?
Yes, for steady sellers. For seasonal or new products, use recent sales and recalculate often.
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