# EOQ calculator: economic order quantity

> Calculate the economic order quantity for any item: orders per year, days between orders, yearly ordering and holding cost, and what your own order size costs.

Source: https://sourcesquid.co/tools/eoq/

Planning tool · free

# EOQ calculator. The order size that costs least.

Economic order quantity (EOQ) is the order size that minimises the combined yearly cost of placing orders and holding stock. Enter demand, order cost, unit cost and holding cost and this calculator gives your EOQ, order frequency, costs, and how far your current order size sits from the best.

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Economic order quantity**0**

Yearly cost at EOQ**0**

Your order costs**0**

__Total cost __Ordering __Holding __EOQ and your order

EOQ = √(2DS ÷ H), with D the annual demand, S the cost per order and H the cost of holding one unit for a year. It assumes steady demand, a fixed unit price and whole-order delivery. Costs shown exclude the price of the goods themselves, which is the same whichever order size you choose. Year of 365 days.

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How it works

## Three steps. One clear answer.

  1. 01

Enter annual demand, the cost of placing one order and the landed unit cost.

  2. 02

Enter the holding cost as a percentage of unit cost per year, or as an amount per unit.

  3. 03

Read your EOQ, days between orders and the cost of ordering your own quantity instead.

Method and sources

EOQ = √(2DS ÷ H), where D is annual demand in units, S the cost per order and H the annual holding cost per unit (unit cost × holding rate). Annual ordering cost = D ÷ Q × S, annual holding cost = Q ÷ 2 × H, and at the EOQ the two are equal. Orders per year = D ÷ EOQ and days between orders = 365 ÷ orders per year. The 5% range is found by solving D ÷ Q × S + Q ÷ 2 × H = 1.05 × minimum total cost. The classic model (Harris, 1913) assumes steady demand, a fixed price and whole-order delivery.

Results are estimates to support your decisions. For binding figures, ask our team or your customs broker.

EOQ questions

## Straight answers.

Anything else, ask us directly. A principal replies, not a bot.

[anirudh@sourcesquid.co](mailto:anirudh@sourcesquid.co)

### What is the EOQ formula?

EOQ = √(2DS ÷ H): D is annual demand, S is the cost of placing one order and H is the cost of holding one unit for a year.

### What holding cost percentage should I use?

Many businesses use roughly 20% to 30% of unit cost per year, covering the cost of capital, storage, insurance and stock that ages or goes out of fashion. Use your own finance team's figure if you have one.

### What if my supplier's MOQ is higher than the EOQ?

Check the total cost at the MOQ: the curve is flat near the bottom, so a moderately larger order often costs only a little more. If the MOQ comes with a lower price, compare the saving with the extra holding cost.

### Does EOQ work for imported goods with long lead times?

Yes for the order size. Lead time does not change the EOQ; it changes when you order, which is the reorder point. Include freight fees that are charged per order in the order cost.

Use it with

## Tools that work well together.

[Planning**Reorder point** The reorder point (ROP) is the stock level at which you place the next order so it arrives before you run out: average daily demand × lead time + safety stock.](https://sourcesquid.co/tools/reorder-point/)[Planning**Safety stock** Safety stock is the extra stock held to cover swings in demand and in supplier lead time.](https://sourcesquid.co/tools/safety-stock/)[Cost**MOQ vs price** The best order quantity under price breaks is the one with the lowest total annual cost: purchase price plus the cost of holding stock plus the cost of placing orders.](https://sourcesquid.co/tools/moq-vs-price/)[Planning**Inventory turnover** Inventory turnover is how many times you sell through your average stock in a period: cost of goods sold divided by average inventory.](https://sourcesquid.co/tools/inventory-turnover/)

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