Money & shopping

Economic order quantity

Explore the basic constant-demand inventory order model.

Economic order quantity
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A clear answer. Here’s how.

Basic EOQ = sqrt(2 × annual demand × fixed order cost / annual holding cost per unit). Shows theoretical order size, orders per year and relevant ordering plus holding cost. Assumes constant demand, instantaneous replenishment, no stockouts or quantity discounts. Fractional theoretical units are shown before any purchasing decision.

See a worked example

Worked example

A fixed demonstration, separate from the values you enter above.

Annual demand (units)
10000
Fixed cost per order
40
Annual holding cost per unit
2

Example result

Theoretical order quantity
632.455532034
Theoretical orders per year
15.8113883008
Annual ordering cost
632.46
Annual holding cost
632.46