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Economic Order Quantity (EOQ) Calculator: Order Size, Reorder Point and Price Breaks

The classic EOQ formula finds the single order quantity that minimises total inventory cost, but most calculators stop at that one number and skip the parts that actually matter for a real purchasing decision. This economic order quantity calculator breaks the annual cost into ordering cost and holding cost, which are genuinely equal at the true EOQ and shows a nearby-quantity comparison table so you can see the EOQ really is the minimum-cost point, not just a formula output to trust blindly. It extends past “how much” to “when” with a built-in reorder point calculator from lead time, average daily demand and optional safety stock and to “is bulk actually worth it” with a quantity-discount and price-break mode that adds real purchase cost and compares the true total cost at each price tier, since the cheapest unit price isn’t always the cheapest total. Holding cost can be entered as a flat currency value per unit per year or as a percentage of unit cost, whichever your own data gives you.

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How to Use

This tool has two tabs: EOQ + Reorder and Quantity Discounts.

Setting up your core inputs (shared across both modes)

• Enter your Annual Demand (D) in units per year.
• Enter your Ordering Cost (S), the cost incurred each time you place an order, regardless of order size.
• Select How is holding cost given?: Flat value per unit per year, or % of unit cost per year.
• If flat, enter your Holding Cost directly per unit per year. If a percentage, enter your Unit Cost and Holding Rate (%/year) instead, and the tool calculates the effective holding cost from these two together.

Using EOQ + Reorder mode

• Under Reorder Point (optional), enter your Lead Time in days and your Safety Stock in units if you want a buffer built into the trigger point.
• Tap Calculate EOQ. The result shows the economic order quantity itself, the annual ordering cost and holding cost broken out separately (equal at the true EOQ), the total annual cost, a comparison table at nearby order quantities proving the EOQ really is the minimum-cost point, the reorder point (lead-time demand plus safety stock), orders per year and time between orders.

Using Quantity Discounts mode

• Switch to the Quantity Discounts tab. Tap Add Tier for each price break your supplier offers, entering the minimum order quantity to qualify for that tier and the unit price at that quantity.
• Repeat for every tier your supplier’s price list offers.
• Tap Find Best Price Break. Rather than assuming the largest discount automatically wins, the tool calculates the true total cost, purchase cost plus ordering cost plus holding cost, at the EOQ within each tier and at each tier’s minimum breakpoint, and tells you which quantity actually produces the lowest genuine total cost.

Exporting your result

• Use Print / PDF for a clean printable copy or Copy to paste the figures into your procurement report.

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Key Features

• EOQ calculation from annual demand, ordering cost and holding cost, using the standard square-root formula
• Ordering-vs-holding cost breakdown, showing the two are genuinely equal at the true EOQ
• Nearby-quantity comparison table, proving the EOQ really is the minimum-cost point rather than just trusting the formula output blindly
• Reorder point calculator, from lead time, average daily demand, and optional safety stock
• Flat or percentage holding cost input, whichever your own data gives you
• Quantity-discount / price-break mode, comparing genuine total cost, purchase plus ordering plus holding, across every price tier, not just the lowest unit price
• Orders per year and time between orders, direct planning figures alongside the EOQ itself
• Export as PDF or copy the result.

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Formula / Logic Used

Economic Order Quantity

$$EOQ = \sqrt{\frac{2DS}{H}}$$

Where $D$ is annual demand, $S$ is ordering cost per order and $H$ is holding cost per unit per year.

Annual Ordering Cost and Holding Cost

$$Ordering\ Cost = \frac{D}{Q} \times S, \qquad Holding\ Cost = \frac{Q}{2} \times H$$

At $Q = EOQ$, these two are always exactly equal, which is precisely the condition the EOQ formula is derived from, minimising their sum.

Reorder Point

$$ROP = (Daily\ Demand \times Lead\ Time) + Safety\ Stock, \qquad Daily\ Demand = \frac{D}{365}$$

Orders per Year and Time Between Orders

$$Orders/Year = \frac{D}{EOQ}, \qquad Time\ Between\ Orders = \frac{365}{Orders/Year}$$

Quantity Discount Total Cost (per tier)

$$Total\ Cost = (D \times Unit\ Price) + \left(\frac{D}{Q} \times S\right) + \left(\frac{Q}{2} \times H\right)$$

For each price tier, the tool evaluates this at the EOQ if it falls within that tier’s valid quantity range or at the tier’s minimum breakpoint quantity if the EOQ falls below it, then compares the genuine total cost across all tiers.

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Who Should Use This Tool

Procurement and inventory managers deciding how much to order and when to reorder and evaluating whether a supplier’s bulk discount genuinely lowers total cost. Also useful for diploma and B.Tech industrial engineering and production engineering students learning EOQ, reorder point and quantity-discount concepts for their operations management coursework.

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Frequently Asked Questions (FAQs)

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