Logistics & production · Calculator companion · By K Imports
Economic order quantity: practical guide
This guide explains how to use the Count.ie economic order quantity. Balance purchase-order costs against average inventory holding costs. Follow the inputs, method and worked example below, then compare your own scenario.
Guide written .
Open the Economic order quantity calculatorWhat to prepare
- Gather order history, item dimensions, weights and supplier lead times.
- Identify the same units and planning period across stock, demand and capacity inputs.
- Check which freight, storage, import or production costs the model includes.
Understand the inputs
The calculation method
EOQ = square root of (2 × annual demand × cost per order ÷ annual holding cost per unit).
Worked example
Illustrative inputs and their result.
Example inputs
- Annual unit demand
- 10000
- Cost per replenishment order (€)
- 50
- Annual holding cost per unit (€)
- 2
- Purchase price per unit (€)
- 12
Calculated example result
- Suggested Order Quantity
- 708
- Annual Orders
- 14.1243
- Annual Relevant Cost
- €1,414.21
How to interpret the result
A capacity, inventory or landed-cost estimate is not a guarantee of service availability. Variability in demand, lead time, packing and customs treatment can change the operating result.
Keep the service requirement fixed while testing demand, lead time or shipment size. Check practical constraints such as handling, access and supplier minimum quantities separately.
Common mistakes to avoid
- Do not mix usable capacity with nominal capacity.
- Keep net goods weight separate from packaged or shipping weight.
- Do not treat a supplier's usual lead time as a guaranteed maximum.
Assumptions and sources
Assumes constant demand, immediate replenishment and no quantity discounts or shortages. Round the practical order policy to supplier constraints.
If your case falls outside this scope, use a more suitable calculator or contact us about an unclear method.