MihsabaHow to use
Calculate economic order quantity and relevant ordering and holding costs under a constant-demand, instantaneous-replenishment model.
- Enter Annual demand in units.
- Enter Fixed cost per order.
- Enter Holding cost per unit per year.
- Enter Days in the period.
- Calculate, then review the results and method assumptions.
How it is calculated
Example
Annual demand of 12,000, order cost of 50 and yearly unit holding cost of 3 give theoretical EOQ of about 632.456. Ordering and holding costs each equal about 948.683 at that quantity.
Important notes
The model assumes steady demand and no stockouts. It excludes safety stock, quantity discounts and purchase price. EOQ is theoretical; pack sizes and supplier minimums require comparing feasible quantities.
Worked examples and interpreting results
Annual demand of 12,000, order cost of 50 and yearly unit holding cost of 3 give theoretical EOQ of about 632.456. Ordering and holding costs each equal about 948.683 at that quantity.
| Case | Calculation | Result |
|---|---|---|
| Order quantity | √(2 × 12000 × 50 ÷ 3) | 632.455532 |
| Total relevant cost | (12000 ÷ Q) × 50 + (Q ÷ 2) × 3 | 1,897.366596 |
How to check the result
The model assumes steady demand and no stockouts. It excludes safety stock, quantity discounts and purchase price. EOQ is theoretical; pack sizes and supplier minimums require comparing feasible quantities.
Frequently asked questions
Is EOQ automatically rounded to whole units?
The theoretical quantity is shown without purchase rounding. Compare costs at nearby quantities your supplier allows.
Why must holding cost be annual?
Demand here is annual, so H must be cost per unit over the same year. Convert a monthly cost before entering it.
Does this convert currencies or import campaign data?
It uses only entered numbers, without import or currency conversion. Align currency, period and metric definitions in your source before entering values.