INVENTORY & OPERATIONS

EOQ Calculator for Ecommerce

Calculate economic order quantity, annual orders, average inventory and total ordering plus holding cost, then see the extra cost of a supplier MOQ.

Currency: USD only. One SKU, stable annual demand and constant costs; EOQ is a planning benchmark, not a purchase commitment.

Demand and order economics

Annual demandUnits sold or used per year for this SKU.Order cost per orderAdmin, fixed freight and receiving per purchase order.Holding cost per unit per yearStorage, capital, insurance and shrinkage per unit.Supplier MOQMinimum order quantity; enter 0 if none.

Planning model. Demand is stable, costs are constant, and there are no quantity discounts, stockouts, shelf-life limits or lead-time variability. EOQ is one SKU at a time.

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EOQ and annual cost

Economic order quantity

548EOQ is feasible. The supplier MOQ does not change the EOQ recommendation.

Suggested order quantity548EOQ rounded up, or the MOQ if larger.

Orders per year21.9Annual demand ÷ suggested quantity.

Average inventory274Suggested quantity ÷ 2.

Order cycle16.7 dDays between orders at this quantity.

Total annual cost$2,190.89Ordering cost plus holding cost.

Extra cost from MOQ$0.00Total cost at MOQ minus total cost at EOQ.

Cost at different order quantities

Ordering cost falls with larger orders; holding cost rises. The total is lowest near the EOQ.

Order qty	Ordering	Holding	Total
274	$2,189.78	$548.00	$2,737.78
548	$1,094.89	$1,096.00	$2,190.89
1,096	$547.45	$2,192.00	$2,739.45

How EOQ is calculated

EOQ = square root of (2 × annual demand × order cost ÷ holding cost per unit). Annual orders = demand ÷ order quantity. Total cost = demand ÷ quantity × order cost + quantity ÷ 2 × holding cost. If the MOQ is larger than EOQ, the suggested quantity uses the MOQ and the extra cost is shown separately.

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EOQ: the order quantity where ordering and holding costs meet

Order too often and purchase-order costs pile up. Order too much and inventory ties up cash and space. EOQ is the quantity where those two annual costs are lowest — and the MOQ is often the constraint that decides what you can actually order.

Two costs moving in opposite directions

Ordering cost includes admin, fixed freight, receiving and inspection per purchase order. Holding cost includes storage, capital, insurance, shrinkage and obsolescence per unit per year.

As order quantity rises, annual ordering cost falls because there are fewer orders, while annual holding cost rises because average inventory is higher. EOQ is the point where the two effects balance.

The formula and its assumptions

EOQ = √(2 × annual demand × order cost ÷ holding cost per unit). The formula assumes stable demand, constant costs, no quantity discounts, no stockouts and no shelf-life limit.

Those assumptions rarely hold exactly. Treat EOQ as a benchmark: it tells you whether the current order size is far from the cost-minimizing range, not whether 548 units is a sacred number.

Worked example

Annual demand 12,000, order cost $50, holding cost $4 per unit per year. EOQ is √(2 × 12,000 × 50 ÷ 4) = 547.72, rounded to 548.

At 548 units, annual orders are 21.9, average inventory is 274, ordering cost is $1,094.89, holding cost is $1,096.00 and total annual cost is $2,190.89. Ordering 274 units doubles orders and raises total cost to $2,737.78; ordering 1,096 units raises it to $2,739.45.

When the MOQ is larger than EOQ

A supplier minimum of 1,000 units makes the EOQ infeasible. The suggested order becomes 1,000, annual orders drop to 12, average inventory rises to 500, and total cost rises to $2,600 — about $409.11 more per year than the EOQ.

That premium is the price of the supplier constraint. It may still be worth paying for better unit price, freight consolidation or reliability. The calculator separates the cost of the constraint from the cost of the inventory itself.

What EOQ ignores

Demand variability, lead-time variability and stockout risk are handled by safety stock and reorder point, not by EOQ. Shelf life, seasonality, cash constraints and quantity discounts also change the optimal order.

A product with a short shelf life may need a smaller order than EOQ. A product with a large quantity discount may justify a larger one. Recalculate EOQ when order cost, holding cost or demand changes materially.

How to use it

Start with your highest-value or highest-order-count SKUs. Use a fully loaded order cost and an annual holding cost that includes the cost of capital, not just warehouse rent.

Pair the order quantity with a reorder point so the order arrives before stock runs out. EOQ answers “how much,” not “when.”

EOQ references checked October 2026: Omni EOQ calculator · Shopify inventory · Investopedia EOQ

What does EOQ stand for?+

Economic order quantity: the order size that minimizes the sum of annual ordering cost and annual holding cost under stable demand and constant costs.

What happens if the MOQ is higher than EOQ?+

The supplier forces a larger order than the cost-minimizing quantity. The calculator uses the MOQ as the suggested order and shows the extra annual cost compared with the EOQ.

Should holding cost include the cost of capital?+

Yes, if you want an economic holding cost. Warehouse rent alone understates the cost of cash tied up in inventory. Include storage, insurance, shrinkage, obsolescence and your capital cost.

Can EOQ be used with variable demand?+

It can be a rough benchmark, but EOQ assumes stable demand. For variable demand, combine it with safety stock and a reorder point, and test a range of demand scenarios.

Why is the total cost not exactly the same at EOQ and nearby quantities?+

The cost curve is flat near the EOQ, so small deviations change total cost only slightly. That is why rounding to a practical order quantity is usually acceptable.

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