Calculator
Enter production and inventory assumptions below. Results will appear above this form after submission.
Example data table
| Scenario | Annual Demand | Ordering Cost | Unit Cost | Holding Rate | Lead Time | Safety Stock | Pack Size |
|---|---|---|---|---|---|---|---|
| Standard metal part | 12,000 | 150 | 25 | 18% | 7 days | 200 | 50 |
| Plastic housing unit | 24,000 | 90 | 8 | 16% | 5 days | 350 | 100 |
| High value machine component | 3,600 | 300 | 140 | 20% | 12 days | 40 | 10 |
Formula used
Economic Order Quantity: EOQ = √((2 × D × S) / H)
D is annual demand, S is ordering or setup cost per order, and H is annual holding cost per unit.
Reorder Point: Reorder Point = (Daily Demand × Lead Time) + Safety Stock
Annual Ordering Cost: (D / Q) × S
Annual Holding Cost: ((Q / 2) + Safety Stock) × H
Total Relevant Cost: Annual Ordering Cost + Annual Holding Cost
This page also adjusts the recommendation for minimum order quantity, maximum order quantity, and pack size multiples.
How to use this calculator
- Enter your annual demand in units.
- Provide ordering or setup cost for each purchase order or production run.
- Enter unit cost and choose holding cost mode.
- Use carrying rate if you track storage as a percentage.
- Enter lead time, working days, and desired safety stock.
- Add optional minimums, maximums, or pack multiples if suppliers require them.
- Click Calculate EOQ to view results above the form.
- Review the cost graph, reorder point, and yearly cost breakdown.
- Use the CSV or PDF buttons to save the output.
Frequently asked questions
1. What does EOQ help me optimize?
EOQ helps balance ordering frequency against inventory carrying cost. It identifies an efficient replenishment quantity that can reduce total operating cost while supporting production continuity.
2. Does EOQ include product purchase cost?
The core EOQ formula focuses on ordering and holding costs. This calculator also shows annual purchase cost separately so you can compare relevant inventory cost with total yearly spend.
3. When should I use carrying rate instead of fixed holding cost?
Use carrying rate when storage, insurance, capital cost, and obsolescence are tracked as a percentage of item value. Use fixed cost when you already know annual holding expense per unit.
4. Why does the recommended quantity differ from the raw EOQ?
The raw EOQ is the theoretical optimum. The recommended quantity may be rounded to supplier pack sizes or adjusted by minimum and maximum order restrictions.
5. What is reorder point in this calculator?
Reorder point estimates when a new order should be placed. It combines expected demand during lead time with any safety stock buffer you want to maintain.
6. Is safety stock part of EOQ?
Safety stock is not part of the classic EOQ formula itself. It is added here to improve reorder planning and reflect more realistic holding cost exposure.
7. Can I use this for manufacturing setups, not only purchases?
Yes. In manufacturing, ordering cost can represent setup cost per production run. The logic remains similar when deciding a practical lot size for recurring output.
8. What assumptions should I review before trusting the result?
Review whether demand is fairly stable, lead time is predictable, holding estimates are realistic, and quantity discounts are not materially changing the true cost structure.