Economic order quantity (EOQ) calculator
Find the order size that costs the least once you add ordering costs and holding costs together. Enter three numbers. The Wilson formula is shown in full.
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The economic order quantity formula
Every time you reorder, two costs pull in opposite directions. Ordering in big batches means fewer orders, so lower ordering costs, but more stock sitting in the warehouse, so higher holding costs. Ordering little and often flips it. The economic order quantity is the batch size where the two are balanced and the total is lowest. The Wilson formula finds it directly:
Here D is annual demand in units, S is the fixed cost of placing one order, and H is the cost of holding one unit for a year. With demand of 4,800 units, a $60 order cost, and $3 to hold a unit for a year, the EOQ is about 438 units, which means roughly 11 orders a year, one about every 33 days, at the lowest combined cost.
What the inputs mean
Cost per order is everything that does not scale with quantity: raising the PO, supplier minimums admin, inbound freight, and receiving time. Holding cost per unit is storage, the capital tied up in stock, insurance, and any spoilage or obsolescence, usually estimated as a percentage of unit cost per year.
Where EOQ stops and judgement starts
EOQ assumes demand is steady, costs are fixed, and there are no bulk discounts. Real orders bend those: a supplier price break, a minimum order quantity, or a seasonal spike can all move the right answer away from the textbook number. Treat EOQ as the baseline batch size, then adjust for the deals and constraints in front of you.
EOQ tells you how much to order; it does not tell you when. That is the reorder point, which uses your lead time and safety stock. The inventory replenishment guide shows how order quantity, reorder point, and safety stock work together, and Restockly runs the whole calculation across your Shopify catalog for you.