Enter the annual demand, the cost per order ($), and the carrying cost per unit ($) into the Ordering Cost Calculator. The calculator will evaluate and display the Ordering Cost.

## Ordering Cost Formula

The following formula is used to calculate the Ordering Cost.

**OC = SQRT ( (2* AD*CPO)/CC)**

- Where OC is the Ordering Cost ($)
- AD is the annual demand
- CPO is the cost per order ($)
- CC is the carrying cost per unit ($)

## How to Calculate Ordering Cost?

The following example problems outline how to calculate Ordering Cost.

**Example Problem #1**

- First, determine the annual demand. The annual demand is given as 500 .
- Next, determine the cost per order ($). The cost per order ($) is calculated as 20 .
- Next, determine the carrying cost per unit ($). The carrying cost per unit ($) is found to be 4.
- Finally, calculate the Ordering Cost using the formula above:

OC = SQRT ( (2* AD*CPO)/CC)

Inserting the values from above yields:

OC = SQRT ( (2* 500*20)/4) = 70.71 ($)

**Example Problem #2**

The variables needed for this problem are provided below:

annual demand = 700

cost per order ($) = 30

carrying cost per unit ($) = 10

Entering these values and solving gives:

OC = SQRT ( (2* 700*30)/10) = 64.807** **($)