Economic order quantity (EOQ) answers "how many units should I order each time?" — as opposed to the reorder point, which answers "when should I order?" You need both: ordering at the right time but the wrong quantity still leaves you either overstocked or short again soon after.
EOQ Calculator
Economic Order Quantity
427 units
≈ 8.5 orders per year at this quantity
The EOQ formula
EOQ = √(2 × Annual Demand × Order Cost ÷ Carrying Cost per Unit per Year). The intuition: ordering in small batches means paying the fixed order cost more often; ordering in large batches means holding (and paying to carry) more inventory on average. EOQ is the batch size where those two costs balance out.
Example: a product sells 3,650 units a year (10/day), costs $50 to place an order regardless of size, and $2/unit/year to carry. EOQ = √((2 × 3,650 × 50) ÷ 2) = √182,500 ≈ 427 units — order roughly 427 units at a time, about 8.5 times a year.
EOQ assumes steady demand and a fixed order cost, so treat the result as a starting point, not a rule to follow rigidly if your actual demand is seasonal or your supplier has a minimum order quantity above the calculated figure.
See also: the economic order quantity glossary entry, the reorder point & EOQ calculator, the reorder point glossary entry.
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