Economic Order Quantity

     

Economic Order Quantity Formula

\( EOQ \;=\;  2 \; D \; CPU \;/\; HC   \)

Symbol

\( EOQ \) = economic order quantity

\( D \) = demand in units (typically on an annual basis)

\( HC \) = holding cost (per unit, per year)

\( CPU \) = cost per order (per purchase order)

Economic order quantity, abbreviated as EOQ, is the ideal order quantity that a company should make for its inventory given a set cost of production.