Inventory Optimization: Calculating Economic Order Quantity (EOQ)
Minimize carrying and ordering costs using mathematical inventory modeling. Compute safety stock and reorder thresholds to prevent supply chain bottlenecks.
Understanding the EOQ Model
Economic Order Quantity (EOQ) is a classical operations research model that determines the optimal order size that minimizes total inventory costs, including ordering costs, carrying costs, and stockout costs.
Formulating EOQ and Safety Stock
The formula is: EOQ = sqrt(2DS/H), where D is annual demand, S is the fixed cost per order, and H is the annual holding cost per unit. Integrating EOQ with lead-time calculations and safety stock ensures continuous operational flow without over-committing working capital.
Put This Theory into Practice
Minimize carrying and ordering costs using Economic Order Quantity optimization. Enter your custom inputs and simulate scenarios in our math-verified EOQ Calculator.
Put This Theory Into Practice
Run your own scenario analysis with our math-verified calculators.
