Economic Order Quantity (EOQ) Solver
Determine optimal order quantity to minimize total inventory costs
Enter Your Problem
Units per year
$ per order
$ per unit per year
CSV: parameter,value — demandRate, orderingCost, holdingCost, unitCost, leadTime, workingDaysPerYear, includeUnitCost, includeLeadTime. After Solve, also Export results CSV.
Theory of Economic Order Quantity
Example Problem:
Annual Demand: 1,200 units
Ordering Cost: $50 per order
Holding Cost: $2 per unit per year
Unit Cost: $10 per unit
Lead Time: 7 days
Solution:
EOQ = √(2 × 1,200 × 50 / 2) = √60,000 = 245 units
Orders per year = 1,200 / 245 = 4.9 orders/year
Annual Ordering Cost = 4.9 × $50 = $245
Annual Holding Cost = (245/2) × $2 = $245
Total Annual Cost = $245 + $245 + $12,000 = $12,490
1. What does EOQ stand for?
2. What is the main objective of the EOQ model?
3. What assumption does the basic EOQ model make about demand?
4. How does an increase in ordering cost affect EOQ?