EOQ Calculator (Economic Order Quantity)

LAST UPDATE: September 24th, 2020


Definition – What is EOQ (Economic Order Quantity)?

EOQ is the ideal order quantity for a company to purchase.

It is based on the demand for an item, the cost to order it, and the cost to carry the item in inventory.

EOQ can be used in a number areas of business analysis, including reordering stock, and cash flow.

Formula – How to calculate EOQ

EOQ = √((2 x Demand x Ordering Cost) ÷ Carrying Costs)


Product X has an annual demand of 5000 units. It costs $100 to make one order and $10 per unit to store the unit for a year.

EOQ = √((2 x 5000 x 100) ÷ 10)

EOQ = √(100000 ÷ 10)

EOQ = √100000

EOQ = 312

Therefore, the economic order quantity is 312 units per order.

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