EOQ Calculator

How to Calculate EOQ (Economic Order Quantity) and ROP (Reorder Point) with the EOQ calculator

The Economic Order Quantity (EOQ) is a crucial inventory management formula used to determine the optimal order quantity that minimizes total inventory costs, including both ordering costs and holding costs. This is essential for businesses looking to streamline inventory processes. The EOQ formula is:

EOQ Formula:

EOQ = √((2DS) / H)

where:

• D is the annual demand for the product
• S is the ordering cost per order
• H is the holding cost per unit per year

To calculate the Economic Order Quantity, follow these steps:

1. Enter the annual demand (D)
2. Enter the ordering cost per order (S)
3. Enter the holding cost per unit per year (H)
4. Click "Calculate EOQ" to get the result

The result will display the EOQ, along with the detailed steps of the calculation, allowing businesses to efficiently manage their inventory.

Another important aspect of inventory management is calculating the Reorder Point (ROP), which determines when you should place a new order to avoid stockouts. The ROP formula is:

ROP Formula:

ROP = d × L

where:

• d is the average daily demand
• L is the lead time in days

To calculate the Reorder Point (ROP), follow these steps:

1. Enter the lead time in days (L)
2. Enter the average daily demand (d) (optional; it will be calculated from the annual demand if not provided)
3. Click "Calculate ROP" to get the result

The result will display the ROP, along with the detailed steps of the calculation, helping you maintain optimal inventory levels.

This EOQ calculator is an essential tool for businesses, allowing them to calculate average inventory levels, optimize ordering, and determine the appropriate reorder point (ROP). Use it to reduce inventory costs and improve overall efficiency.