Economic Order Quantity (EOQ) Calculator
Economic order quantity (EOQ) is the order size that minimizes your combined ordering and inventory-holding costs. It balances buying in bulk (fewer orders, more holding cost) against buying often (less stock, more ordering cost). Enter annual demand, cost per order and annual holding cost per unit to get your optimal order quantity instantly.
Order this many units each time you replenish to keep ordering and holding costs balanced.
The formula
Worked example
With annual demand of 5,000 units, an ordering cost of $50 per order and a holding cost of $3 per unit per year: EOQ = √(2 × 5,000 × 50 ÷ 3) ≈ 409 units. That's about 12.2 orders a year, roughly every 30 days.
Stop calculating by hand
Logistified computes this across your whole Shopify catalog automatically — from live sales data — and turns it into reorder alerts and purchase orders.
Frequently asked
What is economic order quantity (EOQ)?
EOQ is the order size that minimizes the total of your ordering costs and your inventory-holding costs. Order too much and you pay to store and finance excess stock; order too little and you pay setup and shipping fees too often. EOQ finds the sweet spot between the two.
What counts as an ordering cost vs. a holding cost?
Ordering cost is the fixed cost incurred each time you place an order — purchasing admin, supplier setup, inbound freight and receiving. Holding cost is the annual cost of keeping one unit in stock — warehousing, insurance, obsolescence and the capital tied up. Use consistent annual figures for the most accurate EOQ.
How does EOQ relate to the reorder point?
They answer different questions. EOQ tells you how much to order; the reorder point tells you when to order. Use them together: when on-hand stock drops to the reorder point, place an order for the EOQ amount.