← Back to glossary Category: Operațional · Acronym: EOQ Economic Order Quantity (EOQ) Quick answer: The optimal order quantity that minimises the combined total of ordering and holding costs. Key takeawaysAssumes stable demand (complement with forecasting)Must be adjusted to MOQ and volume discountsSensitive to real holding costs What EOQ is EOQ (Economic Order Quantity) is the order quantity that balances ordering cost against inventory holding cost. Wilson formula: EOQ = √(2 × D × S / H), where D = annual demand, S = cost per order, H = holding cost per unit/year. Why it matters to the board EOQ directly optimises working capital: orders too small → high admin and freight costs; orders too large → locked stock and dead-stock risk. Practical limits Assumes stable demand (complement with forecasting) Must be adjusted to MOQ and volume discounts Sensitive to real holding costs How Azuvio helps Azuvio combines EOQ with the supplier MOQ, volume discounts and demand forecast, proposing realistic order quantities, not just theoretical ones. Frequently askedIs EOQ still relevant today?Yes, as a cost-balance principle (ordering vs holding), but it must be combined with forecast, MOQ and discounts, not applied in isolation with assumed constant demand.How does EOQ relate to reorder point?ROP says WHEN you order; EOQ says HOW MUCH you order. Together they form each SKU's replenishment policy. Where Azuvio fitsSoftware OMSSoftware WMSConectori ERP Related termsReorder Point (ROP) — The stock level at which a new order must be placed to avoid a stockout before goods arrive.Lead time — The total time between placing a replenishment order and the goods becoming actually available for sale.Inventory turnover — How many times stock is fully sold and replenished in a period — a measure of capital efficiency.Working capital — The difference between current assets and current liabilities — the cash a company has to fund daily operations. A key financial-health indicator. Last updated: 2026-07-06