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EOQ Calculator
Find the order quantity that minimises ordering plus holding cost.
Order in small batches and you pay for the ordering — the admin, the freight minimums, the receiving time — over and over. Order in huge batches and you pay to hold the result for months. EOQ is the quantity where those two costs cross, and the total is as low as it goes.
Economic order quantity
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Order roughly this many units each time.
Orders per year —
Updates as you type · nothing leaves your browser
Your numbers
units/year
per order
per unit/yr
The formula
EOQ = √(2 × D × S ÷ H)
D = annual demand, S = cost per order, H = annual holding cost per unit.
What it means
Economic Order Quantity — full definition
Read in the glossaryHow to use it
- 1
Annual demand is total units consumed over a year, not the value of them.
- 2
Cost per order is everything a single purchase order consumes regardless of size: buyer time, approvals, inbound freight minimum, receiving and put-away.
- 3
Holding cost per unit per year is the carrying-cost rate applied to one unit's value — capital, storage, obsolescence and insurance combined.
Where it goes wrong
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The cost curve around EOQ is famously flat. Ordering 20% away from the mathematical optimum typically costs under 2% more, so round to a case, pallet or supplier minimum without guilt.
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EOQ assumes steady demand and a constant unit price. If the supplier offers quantity price breaks, compare total cost at each break point rather than trusting the raw EOQ.
Worked example
Twelve thousand units a year
With annual demand of 12,000 units, KES 50 per order and KES 3 per unit per year to hold, EOQ = √(2 × 12,000 × 50 ÷ 3) ≈ 632 units, or about 19 orders a year. Ordering monthly instead — 1,000 units a time — raises holding cost more than it saves in ordering cost, but only by a few percent: this is a decision worth getting roughly right, not precisely right.
Common questions
What if my supplier has a minimum order quantity?
If the MOQ is above EOQ, the MOQ wins — you have no choice. If it is below, order EOQ rounded to the nearest full pack or pallet.
Does EOQ work for perishable stock?
Only with a shelf-life cap on top. Calculate EOQ, then cap the order at the quantity you can sell inside the remaining shelf life, whichever is smaller.
How does EOQ relate to the reorder point?
They answer different questions. The reorder point says when to order; EOQ says how much. You need both.
Let AWRA do this on your live data
This calculator works on one set of numbers. AWRA OpsHub keeps eoq calculator results current across every item, supplier and location — automatically.
More free tools
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