# NetSuite Economic Order Quantity Calculator

> Source: https://netray.co/tools/netsuite-economic-order-quantity-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Find the order quantity that minimizes ordering plus holding cost and compare it with the quantity you buy today.

## Category

netsuite

## Erp

Oracle NetSuite

## Audience

- Buyer
- Inventory planner
- NetSuite admin

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Annual demand

**Key:** demand

**Type:** number

**Default:** 12000

**Min:** 1

**Step:** 100

**Unit:** units

#### Cost to place one order

**Key:** order_cost

**Type:** number

**Default:** 85

**Min:** 0

**Step:** 5

**Unit:** $

**Help:** Buyer time, receiving, inspection and payment processing per order.

#### Unit cost

**Key:** unit_cost

**Type:** number

**Default:** 14.2

**Min:** 0.01

**Step:** 0.1

**Unit:** $

#### Annual holding cost rate

**Key:** hold_pct

**Type:** number

**Default:** 22

**Min:** 0

**Max:** 80

**Step:** 0.5

**Unit:** %

#### Current order quantity

**Key:** order_qty

**Type:** slider

**Default:** 1500

**Min:** 200

**Max:** 4000

**Step:** 100

**Unit:** units

**Outputs:**

#### Holding cost per unit per year

**Key:** hold_unit

**Expr:** unit_cost * hold_pct / 100

**Format:** currency

#### Economic order quantity

**Key:** eoq

**Expr:** round(sqrt(2 * demand * order_cost / hold_unit))

**Format:** integer

**Primary:** true

#### Orders per year at EOQ

**Key:** orders_year

**Expr:** demand / eoq

**Format:** decimal

#### Days between orders at EOQ

**Key:** cycle_days

**Expr:** 365 / orders_year

**Format:** days

#### Annual order plus holding cost at EOQ

**Key:** total_eoq

**Expr:** demand / eoq * order_cost + eoq / 2 * hold_unit

**Format:** currency

#### Annual cost at current quantity

**Key:** total_current

**Expr:** demand / order_qty * order_cost + order_qty / 2 * hold_unit

**Format:** currency

#### Penalty versus EOQ

**Key:** penalty

**Expr:** total_current - total_eoq

**Format:** currency

**Primary:** true

**Chart:**

#### Annual cost vs order quantity

**Type:** line

**X:** order_qty

**From:** 200

**To:** 4000

**Steps:** 38

**Series:**

- total_current

**Disclaimer:** Classic EOQ assumes steady demand, instant replenishment and no quantity discounts. Adjust for price breaks, minimum order quantities and pack sizes.

## Content

**Intro:** Buying in too-small orders burns buyer time and freight; buying in too-large orders ties up cash and space. EOQ finds the balance. This calculator gives the optimal quantity for a purchased item and the cost of the quantity you use now, helping you set supply lot sizing in NetSuite.

**Sections:**

#### How to use it

**Body:** Enter annual demand, the all-in cost of placing and receiving one order, the unit cost and an annual holding cost rate. Set your current order quantity with the slider. The calculator returns the EOQ, orders per year, days between orders and the annual cost at EOQ versus at your quantity. The chart shows the cost curve, which is flat near the minimum, so a quantity near EOQ rounded to a pack size loses very little.

#### The formula

**Body:** EOQ is the square root of two times annual demand times order cost, divided by the holding cost per unit per year. Total relevant cost is demand divided by order quantity times order cost, plus half the order quantity times holding cost. At EOQ, ordering cost equals holding cost. Because the cost curve is shallow around the optimum, an order 20 percent away from EOQ typically costs only a couple of percent more, so practical constraints such as pallet sizes rarely hurt much.

**Bullets:**

- Higher order cost pushes EOQ up
- Higher holding cost pushes EOQ down
- Quadrupling demand only doubles EOQ

#### Limits and mistakes

**Body:** EOQ ignores quantity discounts, so test each price break and compare total cost including purchase price. It also ignores demand variability, which is handled by safety stock, and shelf life, which caps the quantity. The biggest practical error is an inflated order cost, such as allocating the whole purchasing department to each order, which pushes EOQ too high. Use only the costs that truly change with the number of orders.

**Cta:** Netray can compute EOQ for every purchased item from your NetSuite demand and cost data and show which items are ordered at the wrong quantity.

**Faq:**

#### Where does EOQ fit in NetSuite?

**Answer:** EOQ informs the supply lot sizing and order multiple values you set on item records, and the quantities you accept when converting purchase suggestions. It is an input to planning, not a field that NetSuite fills for you.

#### What if the vendor has price breaks?

**Answer:** Compute total annual cost including purchase price at each break quantity, using the break price as unit cost. Choose the quantity with the lowest total, which is sometimes the break quantity rather than the EOQ.

#### How do I estimate ordering cost?

**Answer:** Include only costs that scale with order count: buyer and receiving time, inspection, freight minimums, document handling and payment processing. Fixed overhead that does not change with order volume should be left out.

#### Is EOQ suitable for manufactured items?

**Answer:** For made-in-house items, use setup cost instead of order cost, which gives the economic production quantity with a correction for production rate. This calculator assumes instant replenishment.

## Search terms

eoq calculator, economic order quantity formula, netsuite lot size purchase order, order quantity optimization, ordering cost holding cost calculator, netsuite supply lot sizing, optimal purchase quantity

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