1
Enter demand and batch cost
Enter annual demand and fixed cost per setup or order. Keep variable unit costs separate from fixed batch costs.
Your inputs
parts/year
Known, constant demand. Include scrap requirements in demand beforehand.Please enter a valid value within the stated range.€/batch
Fixed cost per release, independent of batch size.Please enter a valid value within the stated range.€/part
Basis for annual inventory holding cost.Please enter a valid value within the stated range.%/year
Annual share of unit value for capital and storage costs.Please enter a valid value within the stated range.parts
Optional. Leave blank if no cost comparison is needed.Please enter a valid value within the stated range.Optimal whole-unit order quantity
EOQ before rounding
Average orders per year
Ordering and holding costs
Total cost including units
Breakdown
Annual setup or ordering cost
Annual holding cost
Review scenarios
The comparison uses the same cost categories. Unit demand stays unchanged. A negative cost difference means higher costs than the current batch size. Order frequency is a long-run annual average.
20% lower setup cost: optimal quantity
Current minus optimal ordering and holding costs
Recommendations
Review fixed cost per setup first. Shorter setups permit smaller batches in this model. Then check the recommendation against pack sizes, capacity and delivery dates.
Please check your inputs. Required values cannot be blank.
EOQ Calculator: Guide
2
Determine holding cost
Unit value times annual holding rate gives holding cost per unit per year. A current batch size adds the cost comparison.
3
Compare quantity and costs
The calculator checks the whole-unit neighbors of EOQ and chooses the cheaper one. The breakdown shows annual ordering and holding costs.
The formulas at a glance
Holding cost per unit
H = unit value × annual holding rate ÷ 100Cost per unit per year.
EOQ / Andler
Q* = √(2 × D × S ÷ H)Annual demand D and fixed setup or ordering cost S per batch.
Relevant cost
K(Q) = D ÷ Q × S + Q ÷ 2 × HAnnual ordering and holding costs; compare whole-unit neighbors of Q*.
Total cost
D × unit value + K(Q)Constant unit costs plus relevant cost, excluding safety stock.
Worked example: annual demand of 10,000 parts
Annual demand of 10,000 parts, €100 fixed cost per batch, €20 unit value and a 20% holding rate give €4 holding cost per unit per year.
| Item | Calculation | Result |
|---|---|---|
| Continuous EOQ | √(2 × 10,000 × 100 ÷ 4) | 707.11 parts |
| Whole-unit quantity | Compare costs at 707 and 708 | 707 parts |
| Ordering cost | 10,000 ÷ 707 × €100 | €1,414.43/year |
| Holding cost | 707 ÷ 2 × €4 | €1,414.00/year |
| Relevant cost | 1,414.43 + 1,414.00 | €2,828.43/year |
| Total cost | 200,000 + 2,828.43 | €202,828.43/year |
Limits of the calculation
- Basic EOQ assumes constant demand and costs and immediate receipt of the full batch. A finite production rate requires an economic production quantity model.
- Quantity discounts, shortages, capacity limits and minimum batches are excluded. Safety stock is separate from average cycle stock Q/2.
- The result is a planning starting point. A finite annual horizon can produce different costs due to partial final orders and opening stock.
Frequently asked questions
How is economic order quantity calculated?
Take the square root of 2 × annual demand × fixed order cost divided by holding cost per unit per year. The calculator then compares the whole-unit neighbors.
Is EOQ the same as the Andler formula?
The Andler formula used here matches basic EOQ. Both balance fixed ordering or setup costs against inventory holding costs.
What happens with zero holding costs?
Without positive holding cost, this model has no finite minimum. With zero fixed order cost, the continuous minimum is zero. The calculator requires positive values for both.
Why are orders per year shown as a decimal?
D/Q is a long-run annual average. One actual year requires whole releases and may include a partial final order.
How does this relate to setup time and unit cost?
Use the cost per unit calculator for manufacturing cost per good part and the setup time calculator for changeover time components. This model requires fixed cost per batch.
Calculation source: MIT: Introduction to Manufacturing Systems, Inventory (2016)