Definition
The order size that minimises the combined cost of ordering and holding inventory over a period. It balances larger orders, which lower ordering frequency and cost, against the higher holding cost of carrying more stock. The classic EOQ formula assumes steady demand and constant ordering and holding costs.
Frequently asked questions
What is EOQ (Economic Order Quantity)?
The order size that minimises the combined cost of ordering and holding inventory over a period. It balances larger orders, which lower ordering frequency and cost, against the higher holding cost of carrying more stock. The classic EOQ formula assumes steady demand and constant ordering and holding costs.
Which glossary terms are related to EOQ (Economic Order Quantity)?
EOQ (Economic Order Quantity) is a supply chain & warehousing term in the South African import/export industry. Related terms in the same area include 3PL (Third-Party Logistics), 4PL (Fourth-Party Logistics), ABC Analysis, Bonded Logistics, Bonded Warehouse (SOS/OS) — each has its own plain-English definition in the TradeCaravan glossary.