How to use the EOQ & Reorder Point Calculator
EOQ = √(2 × annual demand × cost per order ÷ holding cost per unit per year). It balances ordering costs against storage costs. Reorder point = daily usage × lead time in days + safety stock.
Frequently asked questions
What is holding cost?
The yearly cost of keeping one unit in stock — storage, insurance, spoilage and the interest on money tied up. It is often estimated as 15–30% of the item's cost.
Why add safety stock?
To cover unexpected demand spikes or supplier delays so you do not run out.