692.8203 is the example result. EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time.
EOQ assumes stable demand and ordering/holding costs.
Balancing availability against cash tied up in stock
EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time. An inventory decision must connect demand, lead time and the cost of holding goods. Buying more can reduce ordering frequency but ties up cash and storage. A stock ratio is useful only when its demand period is clear.
Source and result record
For eoq, retain Annual demand, Ordering cost, Holding cost per unit together with the output. Record the date of the source values and the unit convention used in the form. That record separates a change in the underlying case from a change in how the information was entered. A saved result without its source values cannot show which assumption produced it.
Example with the supplied inputs
Annual demand: 12000; Ordering cost: 80; Holding cost per unit: 4. Result: 692.8203. The values are illustrative.
Compare one changed input
Annual demand changes from 12000 to 13200. The result becomes 726.6361. All other inputs remain fixed.
Calculation rule
Result = √(((2 × [Annual demand] × [Ordering cost]) ÷ ([Holding cost per unit])))
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Annual demand | 12000 | Use the source quantity represented by annual demand. Keep the counted population fixed and avoid mixing a unit value with a period total. |
| Ordering cost | 80 | Use ordering cost on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
| Holding cost per unit | 4 | Use holding cost per unit on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
Output: 692.8203 is the example result. EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time. Use the formula to distinguish a cash amount, count, percentage or ratio.
How to use the page
Collect the inputs
Gather Annual demand, Ordering cost, Holding cost per unit. Use one period and the units shown in the form.
Run the calculation
Enter the values and select the action. The calculation rule above explains how the inputs produce the result.
Compare a scenario
Change Annual demand on its own, keeping the other inputs fixed. Read both results before changing another assumption.
Worked example
With the example inputs listed above, the result is 692.8203.
Change Annual demand from 12000 to 13200 while keeping every other value fixed. The result becomes 726.6361. This comparison isolates that input; it does not forecast how other variables will respond.
Check the stated formula, units and limits before using the result in a decision.
Keep the displayed formula, input units and model scope with the result. Corrections or questions can be sent through the request section on this page.
Content updated: October 11, 2026