# EOQ Calculator (Economic Order Quantity)

URL: https://speedycalculator.com/calculators/finance/eoq/
Last updated: 2026-10-25

> The EOQ calculator works out the economic order quantity – the order size that minimises the total cost of ordering and holding inventory – plus the number of orders per year, time between orders and total inventory cost.

## Inputs

- Annual demand (units)
- Cost per order
- Holding cost given as
- Holding cost per unit per year
- Unit cost
- Holding cost rate (%)
- Working days per year

## Results

- Economic order quantity
- Orders per year
- Days between orders
- Annual ordering cost
- Annual holding cost
- Total annual inventory cost

## Formula

```
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year)
Orders per year = demand ÷ EOQ
Total cost = (demand ÷ EOQ) × order cost + (EOQ ÷ 2) × holding cost
```

## Explanation

The EOQ model balances two costs: ordering more often raises ordering costs, while ordering more each time raises storage costs. It assumes steady demand and instant delivery, so add safety stock in practice.

### How to use the EOQ Calculator

- **Annual demand (units)**
- **Cost per order**
- **Holding cost given as**
- **Holding cost per unit per year**
- **Unit cost**
- **Holding cost rate**
- **Working days per year**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter annual demand, the cost of placing an order and the yearly holding cost per unit (or as a percentage of unit cost).

### Tips

- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.

### Common mistakes to avoid

- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.

### Inputs explained

FieldWhat to enterAnnual demand (units)A numberCost per orderAmount in your currencyHolding cost given asChoose one: Amount per unit per year, Percentage of unit costHolding cost per unit per yearAmount in your currencyUnit costAmount in your currencyHolding cost rateIn %Working days per yearA number

### What each result means

- **Economic order quantity** = sqrt(2×[Annual demand (units)]×[Cost per order]÷[Holding cost per unit per year])
- **Orders per year** = [Annual demand (units)]÷[Economic order quantity]
- **Days between orders** = [Working days per year]÷[Orders per year]
- **Annual ordering cost** = [Orders per year]×[Cost per order]
- **Annual holding cost** = [Economic order quantity]÷2×[Holding cost per unit per year]
- **Total annual inventory cost** = [Annual ordering cost] + [Annual holding cost]

### Example values

How the main result changes when **Annual demand** changes and everything else stays at the example values above:

Annual demand (units)Economic order quantity (units)6,0006209,00075912,00087615,00098018,0001,07324,0001,239

## Worked example

Inputs — Annual demand (units): 12,000; Cost per order: $80; Holding cost given as: Amount per unit per year; Holding cost per unit per year: $2.5; Unit cost: $25; Holding cost rate: 20 %; Working days per year: 250.

Results — **Economic order quantity = 876 units**; Orders per year = 13.7; Days between orders = 18.3; Annual ordering cost = $1,095.45; Annual holding cost = $1,095.45; Total annual inventory cost = $2,190.89.

## FAQ

**What is EOQ?**
The order quantity that minimises total ordering and holding costs.

**What are the assumptions of EOQ?**
Constant demand, fixed order costs, constant holding costs and no shortages.

**At EOQ, how do ordering and holding costs compare?**
They are equal.

**What formula does the EOQ Calculator use?**
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year).


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)