Glossary · approach

EOQ

The classic inventory formula for the most economic order quantity to place with a supplier.

Economic Order QuantityWilson Formula

EOQ (Economic Order Quantity) is the oldest answer to 'how much should I order each time' under a constant-demand assumption. It balances two costs: order cost (fixed per order) and holding cost (trapped cash + warehouse). Developed in 1913, it is still the starting point of inventory management — modern (s,S) and newsvendor models build on EOQ. When the constant-demand assumption breaks, it is paired with safety stock.

Örnek

Annual demand 12,000 units, $200 order cost per order, $8/unit/year holding cost. EOQ ≈ 775 units — so order ~775 each time, about 15 orders per year.

Where this term appears

Problems Backward from the Customer Order — Which Raw Material, When, and How Much Should I Order?
Problems Dozens of SKUs from the Same Supplier — At What Frequency Do I Order Each So Trucks and Stock Cost Are Minimum Together?
Problems How Many Orders Per Year, How Much Per Order — So Setup + Holding Cost Is Minimum?
Problems When to Reorder, and How Much?