Economic order quantity calculator
Find the order size that minimises combined ordering and holding costs, with orders per year, days between orders and the total annual cost at that quantity.
5.2 orders a year, roughly every 71 days
| Step | Working | Result |
|---|---|---|
| Holding cost per unit per year | 8 × 25% | $2.00 |
| Economic order quantityThe quantity where the cost of ordering more often equals the cost of holding more stock. | √(2 × 12000 × 450 ÷ 2) | 2,324 units |
| Orders per year | 5.2 | |
| Annual ordering cost | $2,323.79 | |
| Annual holding costAverage stock on hand is half the order quantity. | (2324 ÷ 2) × 2 | $2,323.79 |
Questions people ask about this
What is the EOQ formula?
The square root of two times annual demand times cost per order, divided by the annual holding cost per unit. At that quantity, the cost of ordering more often exactly equals the cost of holding more stock.
Does EOQ work for imported goods?
With one adjustment: your cost per order has to include the fixed part of inbound freight, inspection and customs entry, not just the purchase-order admin. For a container-load importer the real constraint is often the container itself, so round the EOQ to a sensible container fill rather than treating it as gospel.
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Where these numbers come from
This calculator uses arithmetic rather than published rates — every figure comes from the values you enter. See the methodology page for the formulas behind it.
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