Commonly referred to as “EOQ” (Economic Order Quantity)

The Economic Order Quantity (EOQ) is the optimum quantity of goods to be purchased at one time in order to minimize the cost of ordering and holding items in inventory. The two main variables in the Economic Order Quantity (EOQ) calculation are:

At any order point (be it one piece or one thousand pieces), by adding the Carrying Cost per part with the Order Cost per part, you get the total cost of that part.

As illustrated in the following chart, EOQ is where the Order Cost curve and Carrying Cost line intersect, indicating the optimal quantity where Carrying Cost and Order Cost are lowest.