How it works
EOQ = √(2 × annual demand × cost per order / annual holding cost per unit). Round up for a whole-unit planning quantity.
Input definitions
- Annual demand (units)
- Enter the value in the labeled unit.
- Cost per order
- Enter the value in the labeled unit.
- Annual holding cost per unit
- Enter the value in the labeled unit.
A worked example
- Annual demand (units)
- 10000
- Cost per order
- 25
- Annual holding cost per unit
- 2
Assumptions & limits
Constant demand and lead time; no shortages, quantity discounts or capacity constraints. Holding cost is per unit per year, not a percentage.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Should holding cost be entered as a percentage?
No. Enter the annual currency cost of holding one unit. If you only have a carrying-cost percentage, first multiply the unit purchase cost by that percentage.
Are these investment and borrowing results guaranteed?
No. These are deterministic estimates from the inputs and stated method, not predicted returns or lending offers. Actual fees, tax, timing and contractual terms may differ.
Are tax, overhead and refunds included automatically?
Only the costs and rates explicitly entered or described in the formula are included. Use consistent currencies and periods, and check what your own accounting policy requires.
How does the Economic order quantity (EOQ) tool work?
EOQ = √(2 × annual demand × cost per order / annual holding cost per unit). Round up for a whole-unit planning quantity.
What are the assumptions and limits of Economic order quantity (EOQ)?
Constant demand and lead time; no shortages, quantity discounts or capacity constraints. Holding cost is per unit per year, not a percentage.