# Economic Order Quantity (EOQ)

*Last updated: 2026-06-23*

> When companies set out to determine the order size that minimises total inventory costs, the Economic Order Quantity model—universally abbreviated EOQ—provides the calculation framework.

When companies set out to determine the order size that minimises total inventory costs, the Economic Order Quantity model—universally abbreviated EOQ—provides the calculation framework. Ordering costs, which cover administrative effort and processing, fall on a per-unit basis as order volume increases; holding costs, reflecting capital tied up in stock and warehouse expenditure, rise in line with average inventory levels. The EOQ sits at the crossover point of these two cost curves. The model rests on simplifying assumptions: steady demand, stable unit prices, and predictable lead times. In practice, procurement teams treat EOQ as a calculated baseline and adjust it for quantity discounts, supplier minimums, or seasonal shifts in demand. It should not be confused with safety stock, which guards against supply disruptions rather than optimising order economics.

**Source:** [https://en.wikipedia.org/wiki/Economic_order_quantity](https://en.wikipedia.org/wiki/Economic_order_quantity)

## Quick Facts

| Property | Value |
|---|---|
| Term | Economic Order Quantity (EOQ) |
| Language | EN |
| Word count | 127 |
| Last updated | 2026-06-23 |
| Source | https://en.wikipedia.org/wiki/Economic_order_quantity |

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