Calculate the economic order quantity, practical order quantity, ordering frequency and annual inventory cost. Add supplier constraints, compare quantity discounts, or process multiple SKUs at once.
For one SKU. Start with the classic EOQ, then apply real supplier constraints such as MOQ and order multiples.
All-units quantity discount optimizer. The calculator evaluates EOQ and every price-break region, because the cheapest unit price is not always the lowest total annual cost.
For multiple products. Paste rows from Excel or a spreadsheet and export the calculated purchasing policy.
Results
| Quantity | Order Cost | Hold Cost | Relevant Cost |
|---|
| Min Qty | Unit Price | EOQ | Candidate Qty | Total Annual Cost |
|---|
| SKU | EOQ | Recommended | Orders/Yr | Order Cost/Yr | Hold Cost/Yr | Relevant Cost/Yr |
|---|
Economic Order Quantity estimates the order size that minimizes the combined annual cost of placing orders and holding cycle inventory. The WareStat calculator also factors in practical purchasing constraints, compares quantity discounts, and can run the calculation across multiple SKUs at once.
EOQ Formula
EOQ = √(2DS / H)
- D = annual demand in units
- S = fixed ordering cost per order
- H = annual holding cost per unit
When holding cost is entered as a percentage, the calculator converts it to a monetary value using H = unit cost × annual holding rate.
What Should Be Included in Ordering Cost?
Use costs that arise specifically because an order is placed — purchasing administration, order processing, fixed inbound freight, receiving, inspection, and other fixed transaction costs. The purchase price of the units themselves should not be included in S.
What Should Be Included in Holding Cost?
Holding cost can cover warehouse space, cost of capital, insurance, shrinkage, damage, and obsolescence. It should reflect the annual cost of keeping one unit in inventory. When a carrying-rate percentage is used instead, apply it to the unit value.
Theoretical EOQ vs. Practical Order Quantity
The mathematical EOQ isn't always orderable. Suppliers can impose a minimum order quantity (MOQ), and cartons, pallets, or production batches often require fixed order multiples. WareStat shows the theoretical EOQ, then works out a feasible quantity once these constraints are applied — including the annual cost difference the constraint introduces.
EOQ with Quantity Discounts
A lower unit price doesn't automatically make a larger order cheaper overall. Larger orders reduce purchase or ordering costs but push up average inventory and carrying cost at the same time. In Quantity Discounts mode, enter each minimum quantity and its unit price; WareStat evaluates the EOQ inside every all-units price tier and selects the quantity with the lowest estimated total annual cost.
EOQ, Safety Stock, and Reorder Point
EOQ answers how much to order. The reorder point answers when to order. Under the basic model, adding safety stock doesn't change EOQ, since the buffer is held independently of the normal order cycle — though it does raise average inventory and annual carrying cost.
EOQ Assumptions
The classic EOQ model works best when demand is reasonably stable, ordering cost is roughly fixed, replenishment is predictable, and stockouts are handled as a separate concern. Real-world supplier constraints can make the theoretical optimum unreachable, which is why this calculator reports both the theoretical and the practical quantity.
Frequently Asked Questions
Does unit price affect EOQ?
Not directly in the basic formula, when annual holding cost per unit is entered independently. It does come into play when holding cost is calculated as a percentage of unit value, and it becomes essential once quantity discounts are on the table.
Why are ordering cost and holding cost close at EOQ?
In the unconstrained classic EOQ model, the cost-minimizing point occurs where annual ordering cost equals annual cycle holding cost.
Should EOQ be rounded?
Yes, when products must be ordered as whole units, cartons, cases, or pallets. The mathematically nearest quantity isn't always the cheapest feasible one, so the calculator checks nearby valid order quantities rather than simply rounding upward.
Can EOQ prevent stockouts?
No. EOQ optimizes order size; stockout protection depends on reorder point, lead time, demand variability, and safety stock.