Free EOQ Calculator
Economic Order Quantity formula
Enter annual demand, order cost, and holding cost to find the optimal quantity to order each time — minimising total inventory costs with the EOQ formula.
What Is an EOQ Calculator?
An Economic Order Quantity (EOQ) Calculator finds the ideal order size that minimises your total annual inventory cost — the combined cost of placing orders and holding stock. Order too little and you place orders too often, paying high shipping and admin costs. Order too much and you tie up cash in slow-moving stock and pay more in warehousing. EOQ finds the sweet spot. The formula is EOQ = √(2 × Annual Demand × Order Cost ÷ Holding Cost per Unit per Year).
How to Calculate EOQ in 3 Steps
Step 1 — Enter Annual Demand
Enter the total number of units you sell or consume per year. If you sell 200 units per month, your annual demand is 200 × 12 = 2,400 units.
Step 2 — Enter Order Cost
Order cost (also called setup cost) is the fixed cost incurred each time you place a purchase order — including admin time, shipping charges, and supplier processing fees.
Step 3 — Enter Holding Cost
Holding cost (or carrying cost) is the cost to store one unit for one year. It includes warehouse rent, insurance, spoilage risk, and capital tied up in stock. Typically 20–30% of unit cost.
Who Uses This EOQ Calculator?
Retailers & Distributors
Find the optimal order quantity to avoid both overstocking and running frequent small orders that rack up shipping costs.
Warehouse Managers
Optimise purchase orders across hundreds of SKUs to reduce total carrying costs and free up warehouse space.
Supply Chain Analysts
Use EOQ as a baseline model for inventory planning and compare against actual purchase patterns to identify inefficiencies.
Small Business Owners
Balance the cost of placing orders against the cost of holding stock to find the most cost-efficient replenishment strategy.
Frequently Asked Questions
What is Economic Order Quantity (EOQ)?
EOQ is the optimal number of units to order each time you restock, calculated to minimise the total annual inventory cost — which is the sum of ordering costs and holding costs. Formula: EOQ = √(2DS ÷ H), where D = annual demand, S = order cost, H = annual holding cost per unit.
What is order cost (setup cost)?
Order cost is the fixed cost you incur every time you place a purchase order, regardless of quantity. It includes admin time, supplier processing fees, freight charges, and inspection costs on receipt.
What is holding cost (carrying cost)?
Holding cost is the annual cost of storing one unit of inventory. It includes warehouse rent, insurance, taxes, obsolescence risk, and the opportunity cost of capital tied up in stock. A common rule of thumb is 20–30% of unit purchase cost per year.
What does EOQ assume?
The classic EOQ model assumes constant demand, instantaneous replenishment, constant costs, and no stockouts. In practice, use it as a starting point and adjust with safety stock and reorder points for real-world variability.
What is the difference between EOQ and reorder point?
EOQ tells you how much to order. The reorder point tells you when to order (i.e., at what stock level to trigger a new order). Use both together for a complete inventory replenishment policy.
Is this EOQ calculator free?
Yes, completely free. No account or login required.