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Economic Order Quantity Formula

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Economic order quantity is an equation for the inventory that determines the ideal order quantity a company should purchase for its inventory given a set cost of production, demand rate, and other variables. Check FAQs

EOQ = (\frac{2 \cdot Cf \cdot Demand}{C h}) \cdot (\frac{1}{2})

EOQ - Economic Order Quantity?Cf - Fixed cost per order?Demand - Demand in Units Per Year?C_h - Carrying cost per unit per year?

Economic Order Quantity Example

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Here is how the Economic Order Quantity equation looks like with Values.

Here is how the Economic Order Quantity equation looks like with Units.

Here is how the Economic Order Quantity equation looks like.

285714.2857 = (\frac{2 \cdot 500 \cdot 2000}{3.5}) \cdot (\frac{1}{2})

285714.2857 = (\frac{2 \cdot 500 \cdot 2000}{3.5}) \cdot (\frac{1}{2})

285714.2857 = (\frac{2 \cdot 500 \cdot 2000}{3.5}) \cdot (\frac{1}{2})

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Economic Order Quantity Solution

Follow our step by step solution on how to calculate Economic Order Quantity?

FIRST Step Consider the formula

EOQ = (\frac{2 \cdot Cf \cdot Demand}{C h}) \cdot (\frac{1}{2})

Next Step Substitute values of Variables

∴

EOQ = (\frac{2 \cdot 500 \cdot 2000}{3.5}) \cdot (\frac{1}{2})

Next Step Prepare to Evaluate

∴

EOQ = (\frac{2 \cdot 500 \cdot 2000}{3.5}) \cdot (\frac{1}{2})

Next Step Evaluate

∴

EOQ = 285714.285714286

LAST Step Rounding Answer

∴

EOQ = 285714.2857

Economic Order Quantity Formula Elements

Variables

Economic Order Quantity

Symbol: EOQ

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Economic Order Quantity

Fixed cost per order

Fixed costs per order are the cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Symbol: Cf

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Fixed cost per order

Demand in Units Per Year

Demand in Units Per Year represents the total demands of the unit per year.

Symbol: Demand

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Demand in Units Per Year

Carrying cost per unit per year

Carrying cost per unit per year refers to the total cost of holding inventory for a unit per year.

Symbol: C_h

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Carrying cost per unit per year

Other formulas in Important Formulas of Business category

Go Break-Even Point

BEP = \frac{FC}{CM}

Go Return on Capital Employed

ROCE = (\frac{EBIT}{TA - CL}) \cdot 100

Go Solvency Ratio

SR = \frac{SF \cdot 100}{TA}

Go Percentage off

% Off = 1 - (\frac{SP}{OP})

How to Evaluate Economic Order Quantity?

Economic Order Quantity evaluator uses Economic Order Quantity = ((2*Fixed cost per order*Demand in Units Per Year)/Carrying cost per unit per year)*(1/2) to evaluate the Economic Order Quantity, Economic Order Quantity is an equation for the inventory that determines the ideal order quantity a company should purchase for its inventory given a set cost of production, demand rate, and other variables. Economic Order Quantity is denoted by EOQ symbol.

How to evaluate Economic Order Quantity using this online evaluator? To use this online evaluator for Economic Order Quantity, enter Fixed cost per order (Cf), Demand in Units Per Year (Demand) & Carrying cost per unit per year (C_h) and hit the calculate button.

FAQs on Economic Order Quantity

What is the formula to find Economic Order Quantity?

The formula of Economic Order Quantity is expressed as Economic Order Quantity = ((2*Fixed cost per order*Demand in Units Per Year)/Carrying cost per unit per year)*(1/2). Here is an example- 285714.3 = ((2*500*2000)/3.5)*(1/2).

How to calculate Economic Order Quantity?

With Fixed cost per order (Cf), Demand in Units Per Year (Demand) & Carrying cost per unit per year (C_h) we can find Economic Order Quantity using the formula - Economic Order Quantity = ((2*Fixed cost per order*Demand in Units Per Year)/Carrying cost per unit per year)*(1/2).

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Economic Order Quantity Formula

Economic Order Quantity Example

Economic Order Quantity Solution

Economic Order Quantity Formula Elements

Other formulas in Important Formulas of Business category

How to Evaluate Economic Order Quantity?

FAQs on Economic Order Quantity

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