SellersCalc

Inventory math

EOQ Calculator

The order size where ordering costs and holding costs balance — buy less and you pay in paperwork, buy more and you pay in warehouse space.

EOQ = √(2 × annual demand × order cost ÷ holding cost per unit). Every purchase order costs money to place, and every unit sitting in stock costs money to hold; EOQ is the order size where those two costs are lowest in total. Selling 12,000 units a year with a $50 cost per order and $4 to hold each unit annually gives √(2 × 12,000 × 50 ÷ 4) = √300,000 ≈ 548 units per order — about 22 orders a year. Enter your demand, order cost, and holding cost to get the quantity and the ordering cadence it implies.

EOQ Calculator — your numbers

Economic order quantity

547.72

Orders per year

21.91

Estimate only. Results reflect exactly the numbers you enter — verify against your own accounting before making pricing decisions.

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Worked examples

Steady mid-volume SKU

Annual demand 12000
Cost per order $50.00
Holding cost $4.00
Economic order quantity 547.72
Orders per year 21.91

About 548 units per order, roughly every two and a half weeks.

Expensive-to-hold product

Annual demand 4800
Cost per order $30.00
Holding cost $12.00
Economic order quantity 154.92
Orders per year 30.98

High holding cost pushes the answer toward smaller, more frequent orders.

Frequently asked questions

What counts as the cost per order?

Everything a purchase order triggers regardless of its size: staff time to place and receive it, inbound freight minimums, inspection, and any supplier order fee. It is not the cost of the goods themselves. For many small merchants $30–75 per order is realistic once labor and freight paperwork are counted honestly.

How do I estimate holding cost per unit per year?

A practical shortcut is 20–30% of the unit cost per year, covering storage, capital tied up, insurance, and shrinkage. A $16 unit at 25% costs about $4 a year to hold. If you pay a 3PL, their monthly storage bill divided by average units on hand gives a more direct number.

Does EOQ still work if my demand is seasonal?

EOQ assumes reasonably steady demand, so apply it per season rather than per year. Compute it with the demand rate of the current period — peak-season demand for Q4, baseline demand for the rest — and recompute when the rate shifts. For strongly spiky products, a reorder-point system with safety stock matters more than the exact order size.

Should I round the EOQ to supplier case sizes?

Yes — the total-cost curve around the EOQ is flat, so ordering the nearest case pack, pallet quantity, or MOQ above or below the exact number costs very little. Being 20% off the ideal quantity typically raises total ordering-plus-holding cost by only about 2%. Treat EOQ as a target zone, not a precise commandment.

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Part of the Inventory collection.