Inventory Management
Just-In-Time Inventory for Retailers: When It Works and When It Fails
Just-in-time inventory in retail explained. When JIT pays off, when it fails, and how to design a hybrid model for resilience.
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EOQ Calculator
Find the order quantity that minimizes the total cost of ordering and holding inventory.
Inputs
Enter your numbers
units
$
Fixed cost per purchase order placed.
$
Result
Your calculation
Economic Order Quantity
775 units
Orders per Year
15.5
Days Between Orders
23.6 days
Annual Order Cost
$774.60
Annual Holding Cost
$774.60
Formula Used
√((2 × Annual Demand × Order Cost) ÷ Holding Cost)
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Formula
√((2 × Annual Demand × Order Cost) ÷ Holding Cost)
EOQ minimizes the sum of ordering cost and holding cost. It assumes constant demand, constant lead time, and no quantity discounts.
Worked Example
Annual demand is 12,000 units. Each order costs $50 to process. Holding cost is $2 per unit per year. EOQ = √((2 × 12,000 × 50) ÷ 2) = √600,000 ≈ 775 units. Place orders of 775 units to minimize total inventory cost.
Frequently Asked Questions
What are the assumptions of EOQ?+
Constant demand, constant lead time, no discounts, and instantaneous replenishment. Real-world deviations require adjustments.
How is holding cost estimated?+
Typically 15–30 percent of inventory value annually, covering capital, storage, insurance, and obsolescence.
Should I use EOQ for every SKU?+
No. EOQ works best for A items with stable demand. Use modified policies for B/C items.
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Deep-dive guides that explain the math behind this calculator.