Logistics & Supply Chain

Intermediate

Economic Order Quantity

Order size that minimises the combined cost of ordering and holding stock.

Formula

Q = \sqrt{\frac{2DS}{H}}

Live Calculator

Members

Variables

QOrder quantity

DAnnual demand

SCost per order

HHolding cost per unit/yr

Example

D=10000, S=50, H=2: Q = √500000 ≈ 707 units

Did You Know?

The EOQ model dates to 1913 and still underpins inventory software a century later.

logistics eoq inventory

Share this formula

More in Logistics & Supply Chain

Reorder Point

Stock level that triggers a new order, covering demand during the lead time.

Safety Stock

Buffer inventory that absorbs demand variability during lead time.

Inventory Turnover

How many times inventory is sold and replaced in a period.

Days Inventory Outstanding

Average number of days stock sits before being sold.

Little's Law

Average items in a system equals arrival rate times average time in the system.

Cycle Stock

Average working inventory between deliveries, half the order quantity.