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Economic Order Quantity (EOQ) Calculator

Formula

The formula used in the calculation is:

$\text{EOQ} = \sqrt{\frac{2 \times \text{Demand} \times \text{Order Cost}}{\text{Holding Cost}}}$

Description

This calculator computes the Economic Order Quantity (EOQ) based on the input values of yearly demand, order cost, and holding cost per unit. The EOQ model helps businesses minimize the total cost of ordering and holding inventory by determining the optimal order quantity.

Example Calculation

Let's assume the following:

Yearly Demand: 500,000 units
Order Cost: $10
Holding Cost per Unit: $4

Calculate the Economic Order Quantity (EOQ):

$\text{EOQ} = \sqrt{\frac{2 \times 500,000 \times 10}{4}} = \sqrt{2,500,000} = 1,581.14 \text{ units}$

Therefore, the EOQ is 1,581.14 units.