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Basic economic order quantity

Demand, order cost and annual unit holding cost are positive under the deterministic continuous-quantity model.

Read the formula and its variables

Q∗=2DKhQ^*=\sqrt{\frac{2DK}{h}}

Demand, order cost and annual unit holding cost are positive under the deterministic continuous-quantity model.

Variables and scope
InputMeaning
DAnnual demand in units
KFixed cost per order
hAnnual holding cost per unit

Inspect a stated example

D = 10,000, K = 50 and h = 2 give approximately 707.1068 units.

The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.

Keep the conclusion within the evidence

Minimum quantities, integer packs, lead-time uncertainty and discounts can require a different feasible solution.

A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.

Further references