# EOQ Calculator with Vendor Minimum Order Quantity

> Source: https://netray.co/tools/p21-eoq-vendor-minimum-order-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Find the economic order quantity, then see what a vendor minimum order quantity costs you per year and how many days of stock it forces.

## Category

supply-chain

## Erp

Epicor Prophet 21

## Industry

Wholesale Distribution

## Audience

- Buyer
- Purchasing manager
- Inventory planner

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Annual demand

**Key:** demand

**Type:** number

**Default:** 6000

**Min:** 0

**Step:** 100

**Unit:** units

#### Cost to place and receive one PO

**Key:** order_cost

**Type:** number

**Default:** 45

**Min:** 0

**Step:** 5

**Unit:** $

**Help:** Buyer time, receiving, put-away and payables processing per PO.

#### Unit cost

**Key:** unit_cost

**Type:** number

**Default:** 18

**Min:** 0

**Step:** 0.5

**Unit:** $

#### Annual carrying cost rate

**Key:** carry_pct

**Type:** number

**Default:** 22

**Min:** 0

**Max:** 60

**Step:** 1

**Unit:** %

#### Vendor minimum order quantity

**Key:** vendor_min

**Type:** number

**Default:** 1200

**Min:** 0

**Step:** 50

**Unit:** units

**Help:** Use 0 if the vendor has no minimum.

**Outputs:**

#### Holding cost per unit per year

**Key:** hold

**Expr:** unit_cost * carry_pct / 100

**Format:** currency

#### Economic order quantity

**Key:** eoq

**Expr:** sqrt(2 * demand * order_cost / hold)

**Format:** integer

**Primary:** true

#### Order quantity after vendor minimum

**Key:** order_qty

**Expr:** max(eoq, vendor_min)

**Format:** integer

**Primary:** true

#### Annual ordering plus holding cost at EOQ

**Key:** cost_eoq

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

**Format:** currency

#### Annual cost at actual order quantity

**Key:** cost_final

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

**Format:** currency

#### Annual penalty from the minimum

**Key:** penalty

**Expr:** cost_final - cost_eoq

**Format:** currency

#### Orders per year

**Key:** orders

**Expr:** demand / order_qty

**Format:** decimal

#### Days of supply per order

**Key:** days_supply

**Expr:** order_qty / demand * 365

**Format:** days

**Chart:**

#### EOQ and actual order quantity by PO cost

**Type:** line

**X:** order_cost

**From:** 5

**To:** 200

**Steps:** 30

**Series:**

- eoq
- order_qty

**Disclaimer:** Classic EOQ assumes steady demand and no price breaks. Check price breaks and shelf life before ordering.

## Content

**Intro:** The economic order quantity balances ordering cost against holding cost. When the vendor sets a higher minimum, you pay a penalty. This calculator quantifies it so you can negotiate or accept it knowingly.

**Sections:**

#### How to use it

**Body:** Enter annual demand, the true cost to process one purchase order, unit cost and your carrying cost rate. Then add the vendor minimum. The tool shows the unconstrained EOQ, the quantity you must actually buy, and the annual cost penalty. The days-of-supply result tells you how much cash sits on the shelf per order, which matters for slow movers.

**Bullets:**

- Include receiving and payables in PO cost, not only buyer time.
- Run it on A and B items first; C items rarely justify the effort.
- Use it when negotiating a lower minimum or a blanket order.

#### The formula

**Body:** EOQ equals the square root of (2 times demand times order cost divided by holding cost per unit). Holding cost per unit equals unit cost times the carrying rate. Total annual cost at quantity Q is demand over Q times order cost plus Q over 2 times holding cost. The penalty is the difference between cost at the forced quantity and cost at EOQ. A minimum below EOQ costs nothing, since you would order the EOQ anyway.

#### Reading the result

**Body:** A small penalty means the minimum is not worth fighting over. A large penalty, or days of supply far above your normal cycle, is a signal to negotiate, share orders across branches, or find a second source. EOQ is also a reference, not an order: safety stock, lead time and shelf life still decide when to order.

#### Common mistakes

**Body:** Understating PO cost makes EOQ too small. Using list cost instead of net cost distorts holding cost. And applying EOQ to items with quantity price breaks without checking the break tiers can lead you to a quantity that misses a lower unit price.

**Cta:** Netray can analyze purchase history in your ERP to find items where vendor minimums create the biggest annual cost penalty.

**Faq:**

#### Is EOQ still relevant with min/max in my ERP?

**Answer:** Yes as a reference. Min/max or demand-driven replenishment sets timing, while EOQ helps set the order quantity. It is most useful for stable demand items and for vendor negotiations.

#### How do I estimate cost per PO?

**Answer:** Add buyer time, receiving, inspection, put-away and AP processing per PO, then divide total monthly cost by PO count. Many distributors find 25 to 100 dollars once all steps are included.

#### What if the vendor offers a price break?

**Answer:** Compare total annual cost including purchase price at each break quantity. This calculator holds unit cost constant, so run it per break and add the price effect.

#### What does a zero minimum do?

**Answer:** Order quantity equals EOQ and the penalty is zero. Use zero to see your unconstrained baseline.

## Search terms

eoq calculator vendor minimum, economic order quantity calculator, minimum order quantity cost, reorder quantity calculator distributor, purchasing order quantity formula, prophet 21 eoq, moq penalty calculator

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