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EOQ Calculator (Economic Order Quantity)

LAST UPDATE: August 17th, 2018

Calculator

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, cash flow,

Formula

\text{EOQ} = \sqrt{\frac{2 \times \text{Demand} \times \text{Ordering Costs}}{\text{Carrying Costs}}}

Example

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.

\text{EOQ} = \sqrt{\frac{2 \times 5000 \times 100}{10}}

\text{EOQ} = \sqrt{\frac{1000000}{10}}

\text{EOQ} = \sqrt{100000}

\text{EOQ} = 312

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

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