Economic Order Quantity Calculator
The order size that minimises total cost, balancing ordering against holding.
Order too often and ordering costs mount; order too much and holding costs do.
How the economic order quantity calculator works
Order too often and ordering costs mount; order too much and holding costs do. EOQ is the quantity where the two are equal, which is also where their total is lowest — √(2DS/H), from Ford Harris in 1913.
The useful property is that the curve is flat near the bottom. Ordering 20% away from the optimum raises total cost by under 2%, so EOQ is a guide rather than a target, and rounding to a pallet or a case quantity costs almost nothing.
Its assumptions are strong and worth naming: constant demand, fixed lead time, no quantity discounts, no stockouts. Where volume discounts exist the answer usually shifts to a price break instead, and where demand is seasonal EOQ does not apply at all.
Formula: EOQ = √(2DS/H)
Worked examples
| Inputs | Economic order quantity | Note |
|---|---|---|
| 24,000 units a year | 1386 units | EOQ 1,386 |
| Cheaper ordering | 462 units | order more often |
| Expensive holding | 465 units | much smaller orders |
FAQFrequently asked questions
What is economic order quantity?
The order size at which ordering cost and holding cost are equal, which is also where their total is lowest.
How sensitive is EOQ?
Barely. Ordering 20% away from the optimum raises total cost by under 2%, so rounding to a pallet quantity costs almost nothing.
What are its assumptions?
Constant demand, fixed lead time, no quantity discounts and no stockouts. Seasonal demand breaks it entirely.
What if my supplier offers volume discounts?
Then compare total cost at each price break rather than using EOQ directly — the answer usually shifts to a break point.
Why does quadrupling demand only double the order?
Because of the square root. Costs scale more slowly than volume, which is the whole shape of the formula.
Where these figures come from
- Nakajima (1988) — Introduction to TPM — the origin of Overall Equipment Effectiveness and its six big losses
- OSHA — the US workplace safety administration
Last checked: September 2026. Definitions follow standard operations-management practice; where plants commonly differ, the page says so.