EOQ Calculator
Economic Order Quantity — the order size that minimizes total inventory costs. The inventory manager's first calculation.
Free · No signup · By the analysts at Blackridge Research · Updated 2026-08-13
Inputs
Results
What this means
Adjust the inputs to calculate.
About the EOQ Calculator
Economic Order Quantity (EOQ) is the order size that minimizes total inventory costs.
It balances ordering costs against holding costs — the classic trade-off in inventory management.
Formula
EOQ = √(2DS / H)
- D
- — Annual Demand (units)
- S
- — Order Cost (per order)
- H
- — Holding Cost (per unit per year)
How to use this calculator
- 1
Enter annual demand
Annual demand in units.
- 2
Enter order cost
Cost to place each order.
- 3
Enter holding cost
Annual cost to hold one unit in inventory.
Example calculations
Inventory optimization
A manufacturer has 10,000 units annual demand, $50 order cost, and $2 holding cost per unit.
EOQ = √(2 × 10,000 × 50 / 2) = √(500,000) = 707 units.
- EOQ:
- 707 units
- Number of orders per year:
- 14
- Total annual cost:
- $1,414
Order 707 units per order — place 14 orders per year.
Interpreting your results
EOQ provides a starting point for order quantities. Adjust for quantity discounts, seasonality, and supplier constraints.
Ordering more than EOQ increases holding costs; ordering less increases ordering costs.
Need the market data behind this calculator?
The EOQ Calculator is only as good as its inputs. Blackridge Research publishes syndicated market reports with vetted market sizes, growth rates, and competitive landscapes across 40+ industries — and builds custom studies when the shelf report doesn't exist.
Industry applications
Business
- Inventory management: set optimal order quantities.
- Cost reduction: minimize inventory carrying costs.
- Supplier negotiation: use EOQ to determine order frequency.
Construction
- Material procurement: optimize construction material orders.
- Supply chain: balance bulk discounts against storage costs.
Research
- Inventory analysis: study inventory cost optimization.
- Supply chain research: analyze ordering patterns.
Common mistakes to avoid
-
✗ Ignoring quantity discounts
Adjust EOQ upward if suppliers offer volume discounts.
-
✗ Using inaccurate costs
Include all holding costs (insurance, obsolescence, storage).
Frequently asked questions
›What costs are included in holding cost?
Storage, insurance, obsolescence, and opportunity cost of capital.
›How often should I re-calculate EOQ?
When demand, costs, or supplier terms change.
Glossary
- EOQ:
- Economic Order Quantity — the optimal order size.
- Holding cost:
- The cost to hold one unit in inventory for one year.
- Ordering cost:
- The cost to place and receive an order.
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