Inventory-heavy businesses constantly look at ways to optimize their inventory balances. If a company purchases too much stock, it ties up too much cash into inventory and ends up experiencing high storage costs. If the company buys too little, on the other hand, it won’t be able to meet customers’ or production needs. The Economic Order Quantity (EOQ) is a calculation that determines the maximum amount of a product or service that a company should order at one time to minimize costs. In simpler terms, EOQ helps us find the ‘sweet spot’ of how much and how often to order. The EOQ considers ordering costs, inventory carrying costs, and lead time. The goal is achieving the lowest possible cost while maintaining an adequate inventory level. This article will explore the Economic Order Quantity model, how to run the calculation, and what it means for your business. Knowing this, you can