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Economic Order Quantity or Economic Order Quantity Optimization is a Term describing the Practice to determine the optimal quantity for replenishment orders. The Economic Order Quantity model balances inventory costs with ordering costs.

Calculation

Economic Order Quantity
=	√   2 × D × S H

where

• D = Annual demand
• S = Ordering costs per order
• h = Annual inventory holding cost

Alternative names for Economic Order Quantity include: Optimal Order Quantity.

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Economic Order Quantity