Economic Order Quantity Calculator

Formula

The formula to calculate the Economic Order Quantity is:

\[ \text{EOQ} = \sqrt{\frac{2 \times \text{Fixed Cost per Order} \times \text{Demand in Units Per Year}}{\text{Carrying Cost per Unit per Year}}} \]

Where:

$\text{Fixed Cost per Order}$ is the cost that does not change with an increase or decrease in the amount of goods or services produced or sold.
$\text{Demand in Units Per Year}$ represents the total demands of the unit per year.
$\text{Carrying Cost per Unit per Year}$ refers to the total cost of holding inventory for a unit per year.

Economic Order Quantity Definition

Economic order quantity is an equation for the inventory that determines the ideal order quantity a company should purchase for its inventory given a set cost of production, demand rate, and other variables.

How to calculate Economic Order Quantity

Let's assume the following values:

Fixed Cost per Order = $500
Demand in Units Per Year = 2000
Carrying Cost per Unit per Year = $3.5

Using the formula:

\[ \text{EOQ} = \sqrt{\frac{2 \times 500 \times 2000}{3.5}} \]

Evaluating:

\[ \text{EOQ} = 285.71 \]

The Economic Order Quantity is 285.71 units.

Economic Order Quantity Conversion Table

Fixed Cost per Order	Demand in Units Per Year	Carrying Cost per Unit per Year	Economic Order Quantity
400	1800	3.5	641.43
400	1900	3.5	659.00
400	2000	3.5	676.12
400	2100	3.5	692.82
400	2200	3.5	709.12
450	1800	3.5	680.34
450	1900	3.5	698.98
450	2000	3.5	717.14
450	2100	3.5	734.85
450	2200	3.5	752.14
500	1800	3.5	717.14
500	1900	3.5	736.79
500	2000	3.5	755.93
500	2100	3.5	774.60
500	2200	3.5	792.82
550	1800	3.5	752.14
550	1900	3.5	772.75
550	2000	3.5	792.82
550	2100	3.5	812.40
550	2200	3.5	831.52
600	1800	3.5	785.58
600	1900	3.5	807.11
600	2000	3.5	828.08
600	2100	3.5	848.53
600	2200	3.5	868.50