EOQ Calculator Economic Order Quantity

Demand Rate (D):

Ordering Cost (S):

Holding Cost per Unit (H):

Calculate

Result (EOQ):

Introduction:

Calculating the Economic Order Quantity (EOQ) is essential for optimizing inventory management and minimizing costs for businesses. An accurate EOQ calculation ensures that companies maintain sufficient inventory levels without overstocking or understocking.

How to Use:

To utilize the EOQ calculator, input the following parameters:

• Demand Rate (D): The number of units demanded per year.
• Order Cost (S): The cost of placing an order.
• Holding Cost (H): The cost of holding one unit of inventory for a year.

Once these values are entered, click the “Calculate” button to obtain the EOQ.

Formula:

The EOQ formula is derived from balancing the costs of ordering and holding inventory. It is represented as:

Where:

• D = Demand Rate
• S = Order Cost
• H = Holding Cost

Example Solve:

Let’s consider a scenario where the demand rate (D) is 1000 units per year, the order cost (S) is $50 per order, and the holding cost (H) is $2 per unit per year.

Using the EOQ formula:

FAQs:

Q: What is Economic Order Quantity (EOQ)?

A: EOQ is the optimal order quantity that minimizes total inventory costs by balancing ordering and holding costs.

Q: Why is EOQ important for businesses?

A: EOQ helps businesses determine the ideal quantity to order, reducing inventory costs while ensuring adequate stock levels.

Q: How can EOQ be applied in inventory management?

A: EOQ can be used to determine reorder points, minimize stockouts, and optimize inventory turnover.

Conclusion:

In conclusion, the EOQ calculator provides a simple yet powerful tool for businesses to optimize their inventory management processes. By accurately calculating the EOQ, companies can achieve cost savings and improve overall operational efficiency.