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Economic Order Quantity

Balance ordering and inventory holding costs.

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Local calculations. Results are estimates, not professional advice.

Economic order quantity

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Assumes constant demand, instant replenishment, no shortages, no bulk discounts and an unlimited shelf life.

Formula

Use EOQ = √(2DS/H). D is annual demand in units, S is cost per order, and H is annual holding cost per unit. The result balances modeled ordering and holding costs.

Balance ordering and inventory holding costs.

Worked example

Annual demand units
10000
Cost per order
50
Annual holding cost per unit
2
Economic order quantity
707.106781187 units
Orders per year
14.1421356237
Annual ordering plus holding cost
1,414.21356237

Scope and limitations

Assumes constant demand, instant replenishment, no shortages, no bulk discounts and an unlimited shelf life.

Inputs are checked for missing values and allowed ranges. A result outside the finite numeric range is not displayed. Rounding affects display, while the calculation uses the model’s numeric precision.

Check your units and assumptions before relying on a result. Changing a label does not convert a currency or physical unit.

Formula version: c308f787ee9e · Example checked:

Methodology

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