Economic Order Quantity (EOQ) Calculator
Find the order size that minimizes total ordering and holding cost.
The math
How we got your number
- Economic order quantity (units)√(2 × 12,000 × USD 50 ÷ USD 4)= 548
- Orders per year12,000 ÷ 548= 21.91
- Total ordering cost / year21.91 × USD 50= USD 1,095.45
- Total holding cost / year548 ÷ 2 × USD 4= USD 1,095.45
What this number means
EOQ is the order size where total ordering cost and total holding cost are balanced — the point that minimizes their sum.
Order too often and ordering costs pile up; order too rarely and holding costs pile up instead. EOQ shows the balance point.
How to improve it
- 01At the true EOQ, total ordering cost and total holding cost come out equal — a useful sanity check.
- 02Treat EOQ as a benchmark — it assumes steady demand and a fixed cost per order.
Frequently asked questions
What is EOQ?
The order quantity that minimizes the combined total of ordering costs and holding costs.
Why does the formula use a square root?
It's the mathematical point where the ordering-cost curve and the holding-cost curve cross — the minimum of their sum.
What if my real order size is far from EOQ?
You may be ordering too often or too rarely — EOQ shows the balance point to aim toward.
Does EOQ account for demand changes or bulk discounts?
No — the classic formula assumes steady demand and a fixed order cost; treat it as a starting benchmark.
How does WAJ help manufacturers?
WAJ has a manufacturing module already in use by factories running their operations on the platform.
See WAJ's manufacturing module in action.
WAJ has a manufacturing module already used by factories to run their operations on the platform — this calculator is one of the free tools built by the same team.