Economic Order Quantity Calculator

This calculator applies the classic Economic Order Quantity (EOQ) formula -- the square root of (2 x Annual Demand x Ordering Cost Per Order) divided by Annual Holding Cost Per Unit -- to find the order size that minimizes total inventory cost. The formula balances two opposing costs: ordering too often racks up fixed Ordering Cost Per Order charges, while ordering too much ties up capital in Annual Holding Cost Per Unit (storage, insurance, spoilage risk, and the opportunity cost of cash). Because both costs sit inside a square root, doubling Annual Demand or Ordering Cost Per Order only grows EOQ by about 41%, not 100% -- and doubling Annual Holding Cost Per Unit shrinks EOQ by a factor of the square root of 2 instead, about 29%, not the same 41% (halving a denominator inside a square root is not the mathematical inverse of doubling a numerator inside one).

Orders Per Year and Order Cycle Time translate that quantity into a practical ordering rhythm. Unit Cost does not affect EOQ, Orders Per Year, or Order Cycle Time at all -- it only feeds into Average Inventory Value, which multiplies half the order quantity by the per-unit purchase price to estimate capital tied up in stock at any given moment. What this calculator does NOT do: it assumes constant, known demand with no seasonality or lead-time variability, ignores quantity discounts and storage capacity limits, and does not compute a reorder point or safety stock -- those require separate calculators.