Find the order size that minimizes your combined ordering and inventory holding costs.
Your numbers
$
$
Economic order quantity
0
units per order
Orders per year0
Total annual cost$0.00
What EOQ tells you
Economic Order Quantity is the order size that minimizes your total inventory cost by balancing two opposing forces: order too often and you rack up ordering costs; order too much at once and you pay to hold excess stock. EOQ finds the sweet spot between them.
The formula is the square root of (2 times annual demand times cost per order, divided by holding cost per unit per year). Use it as a starting point, then adjust for supplier minimums, bulk discounts, and storage limits.
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