Accounting Economic Order Quantity (Annual) Calculator Examples
See how to interpret annual EOQ results for different inventory demand, ordering cost, and holding cost situations.
These examples show how the annual EOQ model responds when demand volume, ordering effort, or inventory carrying cost changes. Each result is an estimate based on steady demand and the standard EOQ assumptions.
Regularly purchased maintenance component
A business expects annual demand of 10,000 units, spends $50 per purchase order, and estimates a $2 annual holding cost per unit.
Input Summary
Annual demand
10,000 units
Cost per order
$50
Annual holding cost per unit
$2
Calculation Breakdown
- 1EOQ calculationsqrt((2 × 10,000 × 50) ÷ 2)707.11 units
- 2Order frequency10,000 ÷ 707.1114.14 orders per year
- 3Relevant annual cost(14.14 × 50) + ((707.11 ÷ 2) × 2)$1,414.21
Result Summary
Relevant annual cost
$1,414.21
Accounting Economic Order Quantity (Annual) Calculator
Ordering about 707 units at a time produces average cycle stock of about 354 units.
Low-volume specialty stock item
A specialist item has annual demand of 1,200 units, a $40 ordering cost, and a $6 annual holding cost per unit.
Input Summary
Annual demand
1,200 units
Cost per order
$40
Annual holding cost per unit
$6
Calculation Breakdown
- 1EOQ calculationsqrt((2 × 1,200 × 40) ÷ 6)126.49 units
- 2Order frequency1,200 ÷ 126.499.49 orders per year
- 3Average inventory126.49 ÷ 263.25 units
Result Summary
Average inventory
63.25 units
Accounting Economic Order Quantity (Annual) Calculator
The estimated EOQ is about 126 units per order.
High-volume consumable with costly ordering
Annual demand is 60,000 units, each order costs $120 to place and receive, and holding cost is $1.50 per unit annually.
Input Summary
Annual demand
60,000 units
Cost per order
$120
Annual holding cost per unit
$1.50
Calculation Breakdown
- 1EOQ calculationsqrt((2 × 60,000 × 120) ÷ 1.50)3,098.39 units
- 2Order frequency60,000 ÷ 3,098.3919.37 orders per year
- 3Relevant annual cost(19.37 × 120) + ((3,098.39 ÷ 2) × 1.50)$4,647.58
Result Summary
Relevant annual cost
$4,647.58
Accounting Economic Order Quantity (Annual) Calculator
The estimated EOQ is about 3,098 units, with average cycle inventory near 1,549 units.
How to Read Your Results
EOQ is an estimated order size, not an automatic purchase instruction.
Orders per year can be converted into an approximate order interval by dividing the operating year by the result.
Average inventory reflects cycle stock only; add safety stock separately if it is used.
Total relevant annual cost includes ordering and holding cost, not the cost of buying the units.
Round the EOQ only after considering pack sizes, minimum orders, capacity, and delivery timing.
Assumptions & Important Notes
- Demand is even across the year in every worked scenario.
- Orders are replenished in full and inventory declines at a steady rate.
- All currency figures use the same currency.
- The examples exclude quantity discounts, purchase costs, safety stock, and shortage costs.
Related Examples
Frequently Asked Questions
Should I round an EOQ result to a whole number?
Usually, yes. Round to a workable whole quantity while considering supplier pack sizes and operational limits.
Can EOQ be used for low-volume inventory?
Yes, but the result is more sensitive to estimated costs and may need adjustment for expiry risk, minimum orders, or irregular demand.
Why does a higher holding cost reduce EOQ?
Holding more units becomes more expensive, so the formula favors smaller and more frequent orders.
Why does a higher ordering cost increase EOQ?
When each order costs more to process, fewer and larger orders can reduce annual ordering activity.
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