EOQ Calculator
Find the order quantity that minimizes your total inventory cost — balancing the trade-off between ordering too often (high ordering cost) and ordering too much (high holding cost).
Inputs
EOQ = √(2DS / H) — the Wilson formula
Total units sold or consumed per year.
Include admin time, shipping setup, receiving cost per purchase order.
Cost to hold one unit in stock for one year (storage, insurance, capital, obsolescence).
Industry benchmark: 20–30% of unit value per year (includes capital cost ~10%, storage ~5%, risk ~5-15%).
EOQ formula (Wilson model)
EOQ = √(2 × D × S / H)
D = annual demand · S = ordering cost per order · H = holding cost per unit per year
EOQ
—
units/order
Orders/Year
—
purchase orders
Cycle Time
—
days between orders
Total Cost/Yr
—
inventory cost
Reorder Point
—
Order when stock reaches this level
Annual cost breakdown
At EOQ, ordering cost ≈ holding cost — this is the mathematical optimum.
Cost curve — Total vs. Order Quantity
The EOQ is the order quantity where total cost is minimized (bottom of the U-curve)
Cost comparison — different order quantities
| Order Qty | Orders/yr | Ordering Cost | Holding Cost | Total Cost |
|---|
Calculation breakdown
What this means in practice
Automate EOQ in your WMS or ERP
Most warehouse management systems can calculate EOQ and trigger replenishment automatically. See our guides on best WMS software, safety stock formulas, and the Safety Stock Calculator.