Free · Microeconomics calculators 💲

Economic Order Quantity from Demand & Inventory Costs

Estimate continuous economic order quantity from annual demand, ordering cost and annual holding cost, with reverse paths.

  • Formula & worked example
  • Private in your browser
  • No signup
Go to tool

Calculator inputs

Loading calculator…

How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

Annual demand of 10,000 units, order cost 40 and annual holding cost 5 per unit give EOQ 400 units per order.

EOQ = square root of (2 × annual demand × cost/order ÷ annual holding cost/unit)

Worked example

Enter these known values and leave the other values blank.

Annual demand in units
10000 units
Cost per order
40 USD per order
Annual holding cost per unit
5 USD per unit
Continuous economic order quantity
400 units

Assumptions and limitations

  • Demand, ordering cost and holding cost are positive. Use annual demand with annual holding cost in the same currency.
  • The basic model assumes steady demand, constant costs, immediate replenishment, no stockouts and no quantity discounts.
  • EOQ is continuous. For indivisible units or packs, compare feasible order quantities; displayed rounding is not a proof of the best feasible order.
  • Annual demand starts locked. Unlock and clear it before using order quantity and costs to solve for demand.

Common questions

Why is holding cost per unit per year?

The formula balances annual ordering and holding costs. Mixing monthly and annual cost periods would change the result incorrectly.

Should I always round EOQ up?

No. Compare total relevant cost at feasible whole-unit or pack quantities on both sides of the continuous result.

References

The calculation equations, inverse formulas, units, and input rules were imported from this source. Bookify provides the interface and equation solver.

Explore microeconomics calculators 💲 or browse all finance calculators.