692.8203 is the example result. EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time.
Estimate an order quantity that balances the entered ordering and holding costs under steady annual demand. Supplier minimums and quantity discounts are not modeled.
Reading capacity and cost without hiding the workload
EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time. A staffing plan needs available hours and the portion of those hours that can serve the intended work. Paid time, productive time and billable time are separate definitions. Recruiting, training and supervision can change the cost of a role.
What the model includes
Result = √(((2 × [Annual demand] × [Ordering cost]) ÷ ([Holding cost per unit]))) Use one team and one reporting period. Headcount measures should distinguish people from full-time equivalents; hour-based models should state the expected schedule. A temporary absence and a permanent vacancy have different operating consequences. Review the result with the work queue and service commitment. A high utilisation percentage can signal limited room for urgent work, rather than a reason to add more demand immediately.
Example with the supplied inputs
Annual demand: 12000; Ordering cost: 80; Holding cost per unit: 4. Result: 692.8203. The values are illustrative.
Compare one changed input
Annual demand changes from 12000 to 13200. The result becomes 726.6361. All other inputs remain fixed.
Calculation rule
Result = √(((2 × [Annual demand] × [Ordering cost]) ÷ ([Holding cost per unit])))
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Annual demand | 12000 | Use the source quantity represented by annual demand. Keep the counted population fixed and avoid mixing a unit value with a period total. |
| Ordering cost | 80 | Use ordering cost on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
| Holding cost per unit | 4 | Use holding cost per unit on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
Output: 692.8203 is the example result. EOQ assumes stable demand and ordering/holding costs. The economic quantity is separate from a reorder point based on replenishment lead time. Use the formula to distinguish a cash amount, count, percentage or ratio.
How to use the page
Collect the inputs
Gather Annual demand, Ordering cost, Holding cost per unit. Use one period and the units shown in the form.
Run the calculation
Enter the values and select the action. The calculation rule above explains how the inputs produce the result.
Compare a scenario
Change Annual demand on its own, keeping the other inputs fixed. Read both results before changing another assumption.
Worked example
With the example inputs listed above, the result is 692.8203.
Change Annual demand from 12000 to 13200 while keeping every other value fixed. The result becomes 726.6361. This comparison isolates that input; it does not forecast how other variables will respond.
Check the stated formula, units and limits before using the result in a decision.
Keep the displayed formula, input units and model scope with the result. Corrections or questions can be sent through the request section on this page.