EOQ calculatoreconomic order quantity
Enter your yearly demand, the cost of placing an order and the cost of holding stock to find the order size with the lowest total cost. Add your supplier’s minimum to see what you would actually order.
The starting numbers are example values, not Spark data. Replace them with your own.
Economic order quantity
356units
Total yearly cost: $1,025
Orders per year
10.3
Days between orders
36
Yearly ordering cost
$513
Yearly holding cost
$513
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit), rounded to whole units.
The EOQ formula
Balance the cost of ordering against the cost of holding
Small, frequent orders keep stock low but cost more in purchase orders, receiving and freight. Large, rare orders save on ordering but tie up cash and shelf space. EOQ is the order size where those two yearly costs are equal and their total is lowest.
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year)
EOQ answers how much to order. For when to order, use the reorder point calculator. To see how fast your stock sells through, try the inventory turnover calculator.
Worked example (illustrative numbers)
- 1. Holding cost per unit. A SKU costs $12 and holding stock costs 24% a year: $12 × 0.24 = $2.88 per unit per year.
- 2. EOQ. It sells 3,650 units a year and each order costs $50: √(2 × 3,650 × 50 ÷ 2.88) ≈ 356 units.
- 3. What it means. About 10 orders a year, one every 36 days. Ordering and holding each cost about $513 a year, $1,025 in total.
If the supplier’s minimum is 500 units, ordering 500 raises the yearly total to $1,085. That $60 gap is what the minimum costs you, and a useful number to bring to the supplier.
Beyond the formula
EOQ is only as good as its demand number. Demand ESP forecasts it.
This calculator assumes demand is flat all year and nothing is already on order. Spark Inventory feeds EOQ with Demand ESP, its forecasting engine, so every SKU and warehouse gets an order size based on what it is expected to sell next, not last year’s average. Spark then nets out stock you already have and turns the result into a purchase order your team approves.
Annual demand
This calculator: One yearly total you type in.
Spark: Demand ESP’s forecast for the coming lead time, per SKU and warehouse, turned into a yearly rate. It is recalculated as the forecast updates, so order sizes grow into a busy season and shrink after it.
Demand pattern
This calculator: Assumes demand is steady all year.
Spark: Demand ESP sorts every SKU as steady, trending, seasonal or intermittent, backtests several forecasting models on its own history and keeps the one that predicted best.
Stockout days
This calculator: Counted as low demand.
Spark: Sales lost while a SKU was out of stock are added back before forecasting, so a stockout does not shrink the next order.
Promotions and new items
This calculator: Not modeled.
Spark: Demand Calendar events lift or lower the forecast for a set window. New products start from the history of similar items instead of a blank.
Ordering cost
This calculator: A guess per order.
Spark: A workspace setting, $50 per order by default. Change it once and every SKU’s EOQ updates.
Holding cost
This calculator: A rate you estimate.
Spark: A workspace setting, 24% of unit cost a year by default, applied to each item’s own cost.
Stock already on hand or ordered
This calculator: Not considered.
Spark: The reorder quantity is netted against available stock and open purchase orders, so you do not buy twice.
Supplier minimums and price breaks
This calculator: One MOQ check.
Spark: Orders are raised to the supplier’s minimum order quantity, and price book breaks are compared across suppliers.
Items without cost data
This calculator: No answer.
Spark: Falls back to a days-of-cover quantity, and you can override the quantity or order cycle for any item.
From number to purchase order
An order quantity is half the decision. Spark plans the buy.
Every quantity explained
Each suggested order shows where its number came from: EOQ, days of cover or your own override, with the demand rate and costs behind it.
Reorder automation you control
A reorder rule sweeps every SKU and drafts one purchase order per supplier and warehouse. Run it in Observe, Propose or Autopilot mode, and switch it off or reschedule it from the Automation page.
Text with Sparki
Get a text when an item needs reordering and approve the drafted purchase order with one reply. Included on Solo ($99/mo) and up.
Spark MCP
Ask Claude, ChatGPT or any MCP client how much to order and why. Spark answers from your live stock, incoming supply and Demand ESP forecasts.
EOQ FAQ
Economic order quantity questions
What is the EOQ formula?+
EOQ = √(2 × D × S ÷ H), where D is annual demand in units, S is the cost of placing one order and H is the cost of holding one unit for a year. It finds the order size where yearly ordering cost and yearly holding cost are equal, which is where their total is lowest.
What counts as ordering cost?+
Everything that happens once per order regardless of its size: the time to build and send the purchase order, supplier follow-up, receiving and put-away, invoice matching and any flat shipping or handling fee. Many small businesses land between $15 and $150 per order. If you are unsure, $50 is a common starting point.
How do I estimate holding cost?+
Holding cost is usually expressed as a yearly percentage of unit cost. It covers the cash tied up in stock, storage space, insurance, shrinkage and the risk of the item going obsolete. 20% to 30% a year is a typical range, and 24% is a common default.
What if my supplier has a minimum order quantity?+
Order the larger of the EOQ and the MOQ. When the MOQ is far above the EOQ you will carry more stock than ideal, so compare the extra holding cost with switching suppliers or negotiating a lower minimum. This calculator shows the cost at the quantity you would actually order.
When does EOQ give the wrong answer?+
EOQ assumes steady demand, a fixed price and fixed costs. Seasonal items, quantity price breaks, shelf life, cash limits and stock already on order all change the right answer. EOQ tells you how much to order, not when, so pair it with a reorder point.
How does Spark Inventory use EOQ?+
Spark calculates EOQ per SKU and warehouse from Demand ESP’s forecast instead of a flat yearly average. Demand ESP picks the best forecasting model for each SKU by backtesting its own history, accounts for seasonality, stockouts and planned promotions, and updates as sales come in. Ordering cost ($50 by default) and holding rate (24% a year by default) are workspace settings you can change. The reorder quantity is netted against stock already available and on order and raised to the supplier’s minimum, and the result becomes a drafted purchase order for a person to approve.