Economic order quantity balances ordering costs against inventory holding costs.
EOQ(Economic Order Quantity) Calculator
Results
Economic order quantity (EOQ)
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Table of Contents
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What is EOQ Calculator?
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How to Use This Calculator
- Enter or select Yearly demand, Order cost, Yearly cost of holding.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
EOQ = √(2DS/H)
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Variables Explained
| Input | What it means |
|---|---|
| Yearly demand | Use the measured or stated value for this item, with the unit or category shown beside the field. |
| Order cost | The cost amount included by this calculation; keep it on the same basis as the selling amount. |
| Yearly cost of holding | The cost amount included by this calculation; keep it on the same basis as the selling amount. |
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Worked Example
Annual demand 10,000, order cost 25 and annual holding cost 2 give EOQ=500 units.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- The basic model assumes steady demand, known costs and no stockouts or quantity discounts.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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