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The Economic Order Quantity (EOQ) calculator computes the Economic Order Quantity (Qo) based on the amount of demand and the costs of reordering and holding.
INSTRUCTIONS: Choose units and enter the following:
- (D ) This is the demand per unit of time (e.g. per day)
- (RC) This is the reorder cost
- (HC) This is the holding cost per unit of time (e.g. per day).
Economic Order Quantity (EOQ): The calculator computes the Economic Order Quantity (Qo). Note: the Demand (D) and the Holding Cost (HC) need to both be in the same time reference such as per day or per month.
Other Inventory Management Calculators:
- Economic Order Quantity
- Holding Cost per Day
- Optimal Stock Cycle Length
- Variable Cost Per Unit Time
- Optimal Value of Variable Cost per Unit Time
- Total Cost Per Unit Time
- Optimal Cost per Unit Time
- Reorder Level
The Math / Science
The formula for Economic Order Quantity is:
Q0=√2⋅RC⋅DHC
where:
- Q0 is the Economic Order Quantity
- D is the demand per unit of time
- RC is the reorder cost
- HC is the holding cost
This is also known as the Wilson EOQ Model, Wilson Formula or the Andler Formula. The costs are converted to a base currency and then EOQ is computed.
The Economic Order Quantity is the formula for determining how much additional inventory should be added with each new order.
Economic order quantity: This is an excellent inventory model that helps business people know how much or quantities of products to order that will keep the inventory and ordering costs to a minimum. The model can also be used to conduct sensitivity analysis whereby there is uncertainty about the assumptions made in estimating the values of certain key variable. For example the demand value could be changed repeatedly while observing the effect on the order quantity and other variable in the model.
EXAMPLE
In case of the following values
Demand= 280; Reorder Cost=890; Holding Cost=230
The optimal order quantity will be 46.551 which could be rounded up to the next whole number i.e. 47
