📐 Economic Order Quantity (EOQ) Calculator

The Economic Order Quantity (EOQ) is the order size that minimizes the combined cost of ordering and holding inventory — a standard inventory management formula: EOQ = √(2 × D × S ÷ H) (D = annual demand, S = ordering cost per order, H = holding cost per unit per year). For example, with annual demand of 1,000 units, an ordering cost of $100, and a holding cost of $5: EOQ = √(2 × 1,000 × 100 ÷ 5) = √40,000 = 200 units. This gives 1,000 ÷ 200 = 5 orders per year, and a total annual cost (ordering + holding) of (1,000 ÷ 200) × 100 + (200 ÷ 2) × 5 = 500 + 500 = $1,000.

The EOQ formula is a simplified model that assumes constant demand, fixed ordering and holding costs, and a fixed lead time. Real-world factors like demand variability, quantity discounts, and warehouse capacity constraints mean EOQ should be treated as a theoretical baseline, typically used together with safety stock and reorder point in practice. The EOQ value from this calculator feeds directly into the "when and how much to order" decision alongside the Reorder Point Calculator.