Economic Order Quantity & The Order Size That Costs Least
Right-sizes orders of feed
The EOQ is the order size that minimises ordering plus holding cost — EOQ = √(2 × annual demand × order cost ÷ holding cost). Enter the three to get the EOQ, the orders per year and the lowest total annual cost.
Best order quantity
Next: place orders of about 2,121 units, roughly 5.7 times a year — ordering bigger spikes holding cost, ordering smaller spikes ordering cost.
EOQ = √(2·demand·order cost ÷ holding cost). It is the order size where the rising holding-cost curve and the falling ordering-cost curve cross, minimising total cost.
Economic order quantity — key facts
- Formula
- EOQ = √(2 D S ÷ H)
- D
- annual demand in units
- S
- fixed cost per order
- H
- holding cost per unit per year
- Orders/year
- demand ÷ EOQ
- Total cost
- ordering + holding, minimised
- At the EOQ
- ordering cost = holding cost
- Privacy
- Runs in your browser; nothing uploaded
Order too often or too much — both quietly cost you
Every order of feed, fertilizer or packaging carries a fixed cost — the trip, the freight, the paperwork — so ordering little and often racks those up. But ordering huge lots ties up cash and fills the store with stock that costs interest, space and spoilage to hold. The economic order quantity, EOQ = √(2 × demand × order cost ÷ holding cost), is the order size where those two costs balance and their total is at its lowest.
This tool gives the EOQ, the orders per year and the lowest total annual cost, in your currency, as you type. Use it to set a smart reorder size for any non-perishable input, round it to a practical pack or truck-load, and see what your current ordering habit is costing by comparison. Pair it with the Inventory Carrying Cost, Annuity Future Value and Debt-to-Asset Ratio tools to tighten the farm's cash flow.
Find the sweet spot
The exact order size where ordering and holding cost balance.
Set a reorder rhythm
Turn the EOQ into how many times a year to order.
See the lowest cost
Know the minimum total annual inventory cost you can hit.
Any input, any currency
Feed, fertilizer, seed or packaging in 8 currencies.
Frequently Asked Questions
What is the economic order quantity (EOQ)?+
EOQ is the order size that makes the combined cost of ordering and holding stock as small as possible. Order too little and you pay the fixed ordering cost again and again; order too much and you tie up cash and pay to store it. The EOQ is the sweet spot between the two, found with EOQ = √(2 × annual demand × order cost ÷ holding cost per unit).
What is the EOQ formula?+
EOQ = √(2 D S ÷ H), where 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. For example, 10,000 bags of feed a year, a 500 ordering cost and a 4 holding cost give EOQ = √(2 × 10,000 × 500 ÷ 4) = √2,500,000 ≈ 1,581 bags per order.
How many times a year should I order?+
Orders per year = annual demand ÷ EOQ. With a demand of 10,000 units and an EOQ of about 1,581, that is roughly 6.3 orders a year — about once every two months. The tool shows this directly so you can turn the order size into a practical reorder rhythm for feed, fertilizer or seed.
What is the ordering cost?+
Ordering cost is the fixed cost of placing and receiving a single order, regardless of size — paperwork, delivery or freight charges, the trip to the supplier, and inspection or handling on arrival. It does not include the price of the goods themselves. A higher ordering cost pushes the EOQ up, because it pays to order more at once and order less often.
What is the holding cost per unit?+
Holding cost is what it costs to keep one unit in store for a year — the interest on the cash tied up, storage space, insurance, and spoilage or shrinkage. A higher holding cost pushes the EOQ down, because storing stock is expensive so you order smaller, more frequent lots. For perishable or pest-prone inputs, set this higher.
Why does the total cost matter?+
At the EOQ, total annual cost = (demand ÷ EOQ) × order cost + (EOQ ÷ 2) × holding cost — the ordering cost and the holding cost are balanced and their sum is at its minimum. The tool reports this lowest total so you can see what your inventory actually costs and compare it against ordering in your current, possibly larger or smaller, lots.
Does EOQ work for perishable or seasonal farm inputs?+
EOQ assumes steady demand and stock that does not expire, so it fits non-perishable, year-round inputs like fertilizer, packaging or stored feed well. For highly perishable or strictly seasonal items, treat the EOQ as a guide and lower it — capture the spoilage risk by entering a higher holding cost, which the formula will translate into smaller, more frequent orders.
Are the figures exact?+
The EOQ and total cost are exact for the inputs you give, but they are only as good as your estimates of demand, ordering cost and holding cost. Real demand fluctuates and supplier terms change, so treat the EOQ as a target order size, round it to a practical pack or truck-load, and re-run it when your costs move.