Economic Order Quantity (EOQ) Calculator

Calculate the Economic Order Quantity (EOQ) that minimizes total inventory costs. Get instant results for optimal order size, order frequency, and total cost using demand, order, and holding cost inputs.

By CalcMastery Editorial Team

EOQ Calculator (Economic Order Quantity)

Compute the optimal order size that minimizes total inventory cost using the classic EOQ model.

Total expected demand per year (D). Use whole units.

$

Administrative/ordering cost each time you place an order (S).

$

Carrying cost per unit per year including storage, capital, and spoilage (H).

$

Per-unit purchase price (C). Used to show total annual cost (purchase + inventory). It does not affect EOQ under the basic model.

Rounds EOQ to whole units for ordering practicality.

Results

  • EOQ (exact)—
  • EOQ (rounded units)—
  • Orders per Year—
  • Cycle Time (days/order)—
  • Average Inventory (units)—
  • Annual Ordering Cost$
  • Annual Holding Cost$
  • Total Annual Inventory Cost$
  • Total Annual Cost (incl. purchase)$

Enter your inputs above to calculate the results.

Introduction

EOQ (Economic Order Quantity) represents the optimal order size that minimizes total inventory costs by balancing ordering costs and holding costs.

It helps businesses determine how many units to order and how often to order to minimize total cost while meeting demand efficiently.

The calculator supports key inventory parameters including annual demand, order cost, holding cost per unit, and an optional unit purchase cost for total cost estimation.

Formula

The Economic Order Quantity (EOQ) formula determines the optimal order quantity that minimizes total inventory costs — the sum of ordering and holding costs.

EOQ = sqrt(2DS / H)

Where:

  • D = Annual demand (units)
  • S = Ordering cost per order ($)
  • H = Annual holding cost per unit ($)

Example

Let’s say:

  • Annual demand D = 10,000 units
  • Order cost S = $50 per order
  • Holding cost H = $2.5 per unit per year
EOQ = sqrt((2 × 10,000 × 50) / 2.5) = sqrt(400,000) = 632.46 units

Result:

The optimal order size is ~632 units per order, which minimizes the total annual inventory cost.

Supporting Calculations

    • Orders per Year:
D / EOQ = 10,000 / 632.46 approx 15.81
    • Cycle Time (days/order):
365 / 15.81 approx 23.1 days
    • Average Inventory:
EOQ / 2 = 316.23 units
    • Annual Ordering Cost:
15.81 × 50 = $790.5
    • Annual Holding Cost:
316.23 × 2.5 = $790.5
    • Total Annual Inventory Cost:
790.5 + 790.5 = $1,581

Interpretation

An EOQ of 632 units minimizes total costs by balancing how often you order (ordering cost) and how much you store (holding cost).

If you order more, holding costs increase.

If you order less, ordering costs increase.

EOQ finds the sweet spot in between.

Sources & Methodology

How to Use the EOQ Calculator

Enter the values in the inputs

  • Annual demand (D): total units you expect to sell/use in a year.

  • Order cost per order (S): admin + shipping cost per purchase order.

  • Annual holding cost per unit (H): yearly cost to hold one unit (storage, capital, shrink).

  • Unit purchase cost (optional): fill only if you want the tool to show Total Annual Cost incl. purchase

(Optional) Toggle “Show whole units only” if you can order only whole units.

Read the results

  • EOQ (exact / rounded): optimal order size.

  • Plus helpful metrics: orders per year, cycle time (days/order), average inventory, annual ordering cost, annual holding cost, and total costs.

Decide your order policy

  • If rounded is required, use EOQ (rounded) for your actual order quantity.

  • Recalculate quickly if D, S, or H change.