KEVOS® WORKOS · Inventory
Economic Order Quantity (EOQ)
What order quantity balances ordering and holding cost?
Calculates the economic order quantity that balances ordering and holding costs, and shows how flat the cost is near it.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Annual demand | units | Annual demand |
| Cost to place an order | $ | Cost of placing and receiving one order (admin, receiving, inspection) |
| Annual holding cost / unit | $ | Annual holding cost per unit (unit cost × carrying rate) |
Method and formulas
- EOQ = √(2 × annual demand × order cost ÷ holding cost per unit)
- Annual cost = demand ÷ Q × order cost + Q ÷ 2 × holding cost
Limitations
- Steady demand, no price breaks, no stock-outs
Typical uses
- Setting order quantities for steady-demand items
- Reviewing frequent small orders
Who it is for
- Purchasing staff
- Inventory planners
What you get
- EOQ, orders per year and days between orders
- Total ordering and holding cost
- Cost at quantities around the EOQ
Interpreting the result
- Cost changes little near the EOQ, so round to practical pack sizes
References
- Harris F. W., “How many parts to make at once”, Factory, The Magazine of Management, 1913
WORKOS tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.
