In this example, increasing annual unit demand from 1,200 to 1,320 changes the result from 126.4911 units per order to 132.665 units per order. All other inputs stay the same.
Try this with your own numbersFormula and worked example
EOQ = square root(2 × annual demand × ordering cost / annual unit holding cost)
| Input | Example |
|---|---|
| Annual unit demand | 1,200 |
| Cost to place one order | 40 |
| Annual holding cost per unit | 6 |
| Calculated result | 126.4911 units per order |
Choose reliable inputs
Track purchased quantities, usable yield, labour and waste before deciding on a selling price. For this coffee shop calculation, use recipe sheets, supplier invoices and stock counts and a consistent definition of one sale.
- Ingredients: include the portion belonging to this sale or reporting period, and record where the value came from.
- Staffing: include the portion belonging to this sale or reporting period, and record where the value came from.
- Occupancy cost: include the portion belonging to this sale or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
When does the EOQ shortcut stop fitting?
Assumes constant demand and lead time, no quantity discounts and no stockouts. Round to supplier pack sizes separately.
What if this input changes?
If annual unit demand rises by 10%, this example changes by 6.1739 units per order. This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.