Economic Order Quantity

EOQ provides the ideal order quantity to minimize costs related to order, holding, and shortage costs. It's foundational for efficient inventory management.

Formula

Square Root of [(2 x Demand x Order Cost) / Holding Cost]

Example

For an annual demand of 1200 units, order cost of $5, and holding cost of $2 per unit, the EOQ is about 49 units.

Other Efficiency & Performance KPIs

• Average Dock-to-Stock Time
• Fill Rate
• Frequency of Canceled Orders
• Frequency of Emergency Orders
• Order Lead Time