Quick answer
How do you calculate Economic Order Quantity?
Use EOQ = square root of (2 x Annual demand x Order cost / Annual holding cost per unit). Enter the matching values above to calculate the result instantly.
What it measures
Understanding Economic Order Quantity
Estimate the order quantity that balances annual ordering and inventory holding costs. EOQ identifies the theoretical balance between placing many small orders and carrying fewer, larger replenishments.
Interpretation
What the result means
The result is the cost-minimizing order size under the model's constant-demand and constant-cost assumptions.
Action
How to use it
Round to practical pack quantities and test supplier minimums, lead time, safety stock, storage capacity, perishability, and quantity discounts.
Limits
What it leaves out
The basic model excludes uncertainty, stockout cost, variable lead time, price breaks, capacity limits, and multi-item constraints.
The math
Economic Order Quantity formula
Worked example
Example calculation
- Calculation
- sqrt(2 x 24,000 x $75 / $6)
- Result
- 774.6 units per order
Step by step
How to use this calculator
- 1Enter annual demand, cost per order, annual holding cost per unit.
- 2Keep every input on the same time period and measurement basis.
- 3Review the result, then change one assumption at a time to test scenarios.
Decision support
When this calculator is useful
- Replenishment policy
- Ordering-cost analysis
- Inventory planning
Common questions
Frequently asked questions
Which inputs should I use for Economic Order Quantity?
Use annual demand, cost per order, annual holding cost per unit, measured from the same source and period. Include only values that match the definitions shown beside each field.
Why might two Economic Order Quantity calculations differ?
The systems or accounting policies may define annual demand, cost per order, annual holding cost per unit differently. Compare the time period, scope, source, and treatment of exceptional items before comparing results.
How often should I recalculate Economic Order Quantity?
Recalculate when any input changes materially and on the same reporting cadence used for the decision. Save the source and date of each input so the trend remains comparable.
Can I use Economic Order Quantity by itself?
No single metric captures the full decision. Use the result with the related measures, assumptions, and limitations shown on this page.
Calculation reviewed: 2026-06-18. CalcPilot uses the formula shown above and tests representative values during the production build. See our methodology and correction policy.
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