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Economic Order Quantity (EOQ) Calculator
Your numbers
Economic order quantity
936 units
The order size that minimizes your combined ordering and holding cost. At this size you order about every 31.2 days.
Round to your supplier's case pack or minimum order quantity. Total cost barely changes near the EOQ, so ordering a bit above or below is fine.
Orders per year
~11.7
At the EOQ
Total annual cost
$2,339.87
Ordering + holding
Annual ordering cost
$1,169.87
Orders x cost per order
Annual holding cost
$1,170.00
$2.50 per unit / year
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Inventory Hero
Turn the EOQ into a real order plan
The textbook EOQ ignores your case packs, your cash, and your FBA limits. Inventory Hero turns it into orders you can actually place, and keeps them current as costs and demand move.
- Order sizes from your real costs and velocity
- Rounded to your supplier case packs and minimums
- Capped to your FBA capacity and cash on hand
Prefer to run it yourself? Start a 14-day free trial.
The EOQ formula
Economic order quantity
EOQ = square root of (2 x annual demand x cost per order / annual holding cost per unit)
Annual holding cost per unit = unit cost x your holding-cost rate. The EOQ is the order size where annual ordering cost and annual holding cost are equal, which is the bottom of the U-shaped total-cost curve above.
Worked example
A SKU sells 30 units a day, so annual demand is 10,950. Each purchase order costs about $100 to place and receive. The unit costs $10 landed, and you estimate holding costs at 25% per year, which is $2.50 per unit.
- EOQ: square root of (2 x 10,950 x 100 / 2.50) = about 936 units
- Orders per year: 10,950 / 936 = about 11.7, or one roughly every 31 days
- Total annual cost: about $2,340, split evenly between ordering and holding
- If your supplier's MOQ is 1,000: total cost is about $2,345, only ~0.2% above the minimum, because the curve is flat near the EOQ
Order around 936 units at a time (rounded to your case pack or MOQ). Then use the restock calculator for when to reorder and the safety stock calculator for the buffer.
Key terms
- Ordering cost
- The fixed cost of placing and receiving one order, independent of how many units it contains. More frequent, smaller orders raise total ordering cost.
- Holding cost
- The annual cost of keeping a unit in stock: storage fees, tied-up cash, and obsolescence. Bigger orders raise total holding cost.
- Total cost curve
- Ordering cost falls and holding cost rises as order size grows. Their sum is a U; the EOQ sits at the bottom, where total cost is lowest.
Frequently asked questions
What is the EOQ formula?
Economic order quantity equals the square root of (2 x annual demand x ordering cost, divided by holding cost per unit per year). It is the order size where the cost of placing orders and the cost of holding inventory are balanced, which is the lowest point on the total-cost curve.
What counts as ordering cost vs holding cost?
Ordering cost is the fixed cost to place and receive one purchase order: supplier admin, freight booking, inspection, and prep. It does not include the cost of the goods. Holding cost is what it costs to keep a unit in stock for a year: FBA storage fees, the capital tied up in inventory, and obsolescence or shrink. It is usually expressed as a percent of unit cost.
Should I order exactly the EOQ?
Treat it as a target, not a hard number. The total-cost curve is flat near the minimum, so ordering 10 to 20% above or below the EOQ barely changes your cost. Round the EOQ to your supplier's case pack or minimum order quantity, and adjust for cash on hand and FBA capacity limits.
What holding cost rate should I use?
For Amazon FBA, 20% to 30% per year is a common starting range. Build it from your real costs: FBA monthly storage (higher in Q4 and for aged inventory), your cost of capital, and a margin for units that go obsolete. The higher your holding cost, the smaller and more frequent your orders should be.
How does EOQ relate to the reorder point?
They answer different questions. EOQ is how much to order. The reorder point is when to order. Use EOQ to set the order size, then a reorder point and safety stock to decide the moment the order goes out, sized from your sales velocity and lead time.
Inventory Hero
We run this for you, every SKU, every day.
Inventory Hero turns your real sales, costs, and lead times into order recommendations that respect your cash, your case packs, and your FBA limits, not just the textbook optimum.
Prefer to run it yourself? Start a 14-day free trial.
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<p style="font:13px/1.5 system-ui,sans-serif;text-align:center;margin:8px 0 0"><a href="https://www.inventoryhero.ai/tools/eoq-calculator">EOQ Calculator</a> by Inventory Hero</p>See all our free Amazon FBA calculators.