Economic order quantity (EOQ)
The order size that balances ordering and holding cost, with orders per year and annual cost.
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- Your own numbers, worked out as often as you like
- The full order quantity sheet you can print or save to My work
- 3 cited sources, linked, with the checks to make
- Every other tool for the same role, in the same plan
- A plain-words read of your result (a fuller AI read with the Bifrost AI add-on)
Included in these role plans
Example result · fictional numbers
What you get: order quantity sheet
Worked out by this tool from its default inputs. Its role plan lets you run your own numbers, print the sheet and save it.
Order 624 units (26 cases, 1.3 pallets) every 19 days; $3,281.98 a year to order and hold
- EOQ
- 622 units
- Orders per year
- 19.3
- Days between orders
- 19
- Annual ordering + holding cost
- $3,282
- Average cycle stock value
- $7,459
Order quantity for the PO
- Textbook EOQ
- 622 units
- Rounded to cases
- 624 units (26 cases)
- Vendor minimum
- None entered
- Shelf-life limit
- None entered
- Space limit
- None entered
- Order quantity
- 624 units: EOQ rounded up to whole cases of 24
and 1 more lines
Also on the sheet
- Ordering calendar · 4 lines, starting with “Orders a year”
- Cost sheet at the order quantity · 5 lines, starting with “Ordering cost a year”
- What if you order more or less (cost curve) · 5 lines, starting with “50% of EOQ, 311 units”
The plain-words read of this example
The textbook EOQ is 622 units; for the PO, order 624 units. EOQ rounded up to whole cases of 24. That is 19.2 orders a year, one every 19 days, at 1.3 pallets each. Ordering and holding cost $3,281.98 a year, the same as the exact EOQ. Harris's square-root rule gives a flat cost curve, so ordering 75% or 150% of the EOQ costs only 4.2% and 8.3% more. Check the order cost and carrying rate against your books before you change the ERP.
3 cited sources
- How Many Parts to Make at Once (F. W. Harris, 1913, reprinted in Operations Research 38(6), 1990) (Operations Research (INFORMS), via IDEAS/RePEc)
- ESD.273J Logistics and Supply Chain Management, lecture 2: inventory and EOQ models (MIT OpenCourseWare)
- H.15 Selected Interest Rates (Board of Governors of the Federal Reserve System)
Plus 5 step-by-step checks, a print layout and a link that reopens it with your numbers.