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EOQ Calculator with Vendor Minimum Order Quantity

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.

Your numbers

Annual demand

units

Cost to place and receive one PO

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

Unit cost

Annual carrying cost rate

Vendor minimum order quantity

units

Use 0 if the vendor has no minimum.

Your results

Economic order quantity

369

Order quantity after vendor minimum

1,200

Holding cost per unit per year

Annual ordering plus holding cost at EOQ

$1,462

Annual cost at actual order quantity

$2,601

Annual penalty from the minimum

$1,139

Orders per year

Days of supply per order

73 days

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

Save results:

EOQ and actual order quantity by PO cost

Sweeps Cost to place and receive one PO from 5 to 200, holding your other inputs fixed.

Vendor minimum impact report

Optional: we can show how vendor minimums and order cost could be analyzed across your full item file.

Optional. The tool and every export work without this. No spam.

How to use it

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.

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

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

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

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.

Frequently Asked Questions

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

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?

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?

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?

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

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

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