Economic Order Quantity Calculator

About this calculator

The Economic Order Quantity (EOQ) is the classic inventory-management formula for the order size that minimizes total inventory cost — the balance point between ordering too often (racking up ordering costs) and ordering too much at once (racking up holding costs). It comes from the Wilson formula, EOQ = sqrt(2DS/H), where D is annual demand in units, S is the fixed cost to place one order, and H is the annual holding cost per unit.

Below the EOQ, a business pays too much in repeated ordering, shipping, and processing costs; above it, capital gets tied up in warehouse space, insurance, spoilage, and obsolescence risk. Retailers, manufacturers, and distributors use EOQ to set reorder quantities and estimate how many orders per year they'll place. This calculator takes your annual demand, cost per order, and annual holding cost per unit and returns the EOQ along with the resulting number of orders per year.