EOQ Calculator
CheckedThis EOQ calculator finds the economic order quantity: the restock size where ordering costs and holding costs balance out. Free, no sign-up, and the result updates as you type.
Enter your numbers
EOQ falls apart when the holding cost is wrong, and it usually is. Sellers put in the warehouse rent per pallet and stop, ignoring the capital sitting dead in the stock, the insurance, the shrinkage and the units that get marked down because they sat too long. Understate holding cost and the square root tells you to order far too much at once. A reasonable working figure is 20-30% of a unit's landed cost per year. Get that input right and EOQ finds the order size where ordering and holding cost exactly balance.
How it's calculated
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year) Orders per year = demand ÷ EOQ
LaTeX source
\text{EOQ} = \sqrt{\frac{2DS}{H}} \qquad \text{Orders} = \frac{D}{\text{EOQ}} Worked examples
9,600 units a year, $85 per purchase order
714.1 units per order
2 × 9,600 × 85 is 1,632,000; divided by $3.20 gives 510,000, and the square root is 714.1 units. That means 13.44 orders a year, one about every 27 days. Ordering and holding each cost $1,142.63, for a total of $2,285.26 — the hallmark of the optimum is that the two halves are equal.
The numbers used
- Annual demand
- 9600
- Cost per order
- 85
- Holding cost per unit per year
- 3.2
A slower line with round numbers
200 units per order
2 × 2,400 × 50 is 240,000; over $6 that is 40,000, whose square root is exactly 200. Twelve orders a year, one every 30.4 days, costing $600 to order and $600 to hold. Doubling demand would not double the order size — it only raises EOQ by about 41%, because of the square root.
The numbers used
- Annual demand
- 2400
- Cost per order
- 50
- Holding cost per unit per year
- 6
Questions sellers ask
How do you calculate EOQ?
Take the square root of two times annual demand times the cost per order, divided by the annual holding cost per unit. For 9,600 units, $85 per order and $3.20 of holding cost, that is √(1,632,000 ÷ 3.20) = 714 units. Keep both cost inputs on the same annual basis or the answer will be out by whatever factor you mixed.
Is there an EOQ formula in Excel?
There is no built-in function, but =SQRT(2*B1*B2/B3) with demand in B1, order cost in B2 and holding cost in B3 does it in one cell. Guard the divide with =IF(B3=0,"",SQRT(2*B1*B2/B3)) so a blank holding cost returns nothing rather than an error, and round the result up to the supplier's case pack before ordering.
Is EOQ still relevant today?
Yes, as a sanity check rather than a purchase order. Its assumptions — steady demand, a fixed cost per order, no quantity discounts — rarely hold exactly, but it reliably shows whether you are ordering roughly the right amount. If EOQ says 700 and you order 3,000 to get a price break, the model tells you how much that discount is really costing in holding.
What is EOQ and MOQ?
EOQ is the order size your own costs make cheapest; MOQ is the minimum your supplier will accept. When the MOQ is above the EOQ you have no choice but to hold more stock than is optimal, and the gap is a real cost worth quantifying when you negotiate. When EOQ is far above MOQ, you are free to order at the efficient quantity.
You might need next
Embed this calculator on your site Free, one line of HTML.
Optional: let the iframe resize itself
Paste this once anywhere on the same page and the iframe grows and shrinks to fit its contents instead of sitting at a fixed 520px.
Free to embed on any site, commercial or not — we only ask that you leave the "by SharpTally" credit link under it in place.