Enter the carrying cost per unit per year, the fixed cost per order, and the demand of units per year into the EOQ calculator below. EOQ determines the most cost-efficient way for a company to order goods.

## EOQ Formula

The following formula is used in the EOQ calculator above:

EOQ = SQRT(2DS/H)
• Where D is the demand in units per year
• S is the order cost ($) • H is the holding cost ($)

## EOQ Definition

EOQ is the ideal quantity to be ordered by a company to minimize holding costs, shortage costs, and order costs.

## How to calculate EOQ?

How to calculate EOQ?

1. First, determine the fixed cost per order.

The is the total cost of an order.

2. Next, determine the demand.

Calculate or measure the annual demand.

3. Next, determine the carrying cost.

Also, known as the holding costs, measure the carrying cost per unit per year.

4. Finally, calculate the EOQ.

Using the formula above, calculate the EOQ.

## FAQ

What is EOQ?

EOQ is the ideal quantity to be ordered by a company that would minimize holding costs, shortage costs, and order costs.