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.
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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?
- First, determine the fixed cost per order.
The is the total cost of an order.
- Next, determine the demand.
Calculate or measure the annual demand.
- Next, determine the carrying cost.
Also, known as the holding costs, measure the carrying cost per unit per year.
- Finally, calculate the EOQ.
Using the formula above, calculate the EOQ.
FAQ
EOQ is the ideal quantity to be ordered by a company that would minimize holding costs, shortage costs, and order costs.