Economic order quantity - calculator 2026

Quick answer

Nearly 70% of restaurant owners admit they've never calculated their optimal order quantities, costing them thousands annually in unnecessary ordering and storage expenses. Most hospitality entrepreneurs either order too frequently in small batches or place massive orders too infrequently.

Nearly 70% of restaurant owners admit they've never calculated their optimal order quantities, costing them thousands annually in unnecessary ordering and storage expenses. Most hospitality entrepreneurs either order too frequently in small batches or place massive orders too infrequently. Both approaches drain profits through inflated ordering and storage costs.

What is the economic order quantity?

The economic order quantity (EOQ - Economic Order Quantity) represents the sweet spot for ordering - that perfect amount that minimizes your total inventory costs. It balances two competing expenses:

Ordering costs: Time, administration, delivery per order
Storage costs: Space, energy, capital tied up, spoilage

Order too often? Your ordering costs skyrocket. Order massive quantities? Storage costs eat your margins.

The EOQ formula for hospitality

The standard EOQ formula is:

EOQ = √(2 × Annual consumption × Ordering costs) / Storage costs per unit

? Example: Olive oil calculation

Restaurant uses 240 bottles of olive oil per year:

Annual consumption: 240 bottles
Ordering costs: €15 per order (time + administration)
Purchase price: €8 per bottle
Storage costs: 20% of purchase price = €1.60 per bottle per year

EOQ = √(2 × 240 × €15) / €1.60 = √7.200 / 1.60 = √4.500 = 67 bottles

Optimal: 67 bottles per order, order approximately 4 times per year

Determining ordering costs

Ordering costs run higher than most operators realize. Here's what adds up:

Time to order: 30 minutes × €25/hour = €12.50
Administration: Processing invoice, paying = €5
Receiving delivery: 15 minutes × €25/hour = €6.25
Storing and checking: 10 minutes × €25/hour = €4.17

Total ordering costs: approximately €15-30 per order, depending on your hourly rate.

⚠️ Note:

Don't just count delivery costs - your time has value too.

Calculating storage costs

Storage costs consist of:

Capital costs: Money tied up in inventory (15-25% per year)
Storage space: Refrigeration, freezer, dry storage
Insurance and risk: Theft, spoilage, damage
Energy: Cooling, lighting

For hospitality operations, 20-30% of the purchase price per year represents typical storage costs. But here's something most kitchen managers discover too late - underestimating these costs by even 5% can throw off your entire ordering strategy.

? Example: Storage costs calculation

Product costs €10 per unit:

Capital costs: €10 × 20% = €2.00
Storage space: €0.50 per year
Insurance/risk: €0.30 per year
Energy (cooling): €0.20 per year

Total storage costs: €3.00 per unit per year = 30%

Adjusting EOQ for perishable products

The standard EOQ formula works brilliantly for shelf-stable products. Fresh products need different considerations:

Spoilage percentage: 5-15% for vegetables, 2-8% for meat
Shelf life: Maximum inventory = shelf life in days
Seasonal fluctuations: Summer/winter differences

For fresh products: order more frequently, smaller quantities. EOQ provides guidance, but shelf life rules the decision.

Practical application in your restaurant

Focus EOQ on your top 20 ingredients that represent 80% of your purchasing spend:

Dry products: Rice, pasta, oil, wine - follow EOQ religiously
Chilled products: Meat, fish, dairy - EOQ as guideline, shelf life decides
Fresh products: Vegetables, fruit - order daily or every other day

? Example: Restaurant purchasing strategy

Bistro with €8,000 monthly purchases:

Dry inventory: Apply EOQ, order once every 6 weeks
Meat/fish: EOQ as foundation, order 2 times per week
Vegetables: Daily fresh delivery
Beverages: Apply EOQ, order monthly

Result: 40% fewer ordering costs, 25% less waste

Digital tools

Calculating EOQ manually eats up valuable time. Many hospitality operators use specialized software to:

Automatically track consumption per ingredient
Calculate optimal order quantities
Send reminders for reordering
Instantly adjust for supplier price changes

This saves hours weekly and prevents costly over-ordering or stockouts.

How do you calculate the economic order quantity? (step by step)

Determine your annual consumption per product

Add up how much of each main ingredient you use per year. Check your purchase invoices from the last 12 months or estimate based on weekly consumption × 52 weeks.

Calculate your ordering costs per order

Add up: time to order (30 min × €25/hour), administration (€5), receiving delivery (15 min × €25/hour), storing (10 min × €25/hour). Usually €15-30 per order.

Determine storage costs per unit per year

Calculate 20-30% of the purchase price for capital costs, storage space, insurance and energy. For a €10 product = €2-3 storage costs per year.

Apply the EOQ formula

EOQ = √(2 × Annual consumption × Ordering costs) / Storage costs per unit. This gives you the optimal order quantity that minimizes costs.

Check against practical limitations

Check if the result fits with shelf life, storage space and cash flow. For fresh products: use EOQ as a guideline, but order more frequently in smaller quantities.

✨ Pro tip

Calculate EOQ for your 3 highest-cost proteins first, then review results after 60 days. Most operators save 15-25% on these items alone, which often exceeds the total savings from optimizing all smaller purchases combined.

Calculate this yourself?

In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.

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Frequently asked questions

Should I use EOQ for all products?

Focus on your top 20 ingredients that make up 80% of your purchasing spend. For small-value items, the calculation time costs more than potential savings.

What if my supplier has minimum order quantities?

Compare the supplier minimum with your calculated EOQ. If the minimum is significantly higher, either find another supplier or accept higher storage costs for better unit prices.

How often should I recalculate my EOQ?

Recalculate when major changes occur: new suppliers, price shifts, seasonal transitions, or significant volume growth. Review at least twice yearly for accuracy.

Does EOQ work for seasonal products?

You'll need modified calculations for seasonal items. Calculate EOQ per season based on that period's consumption patterns, since demand varies dramatically throughout the year.

What if I have limited storage space?

Limited space increases your storage costs due to scarcity, resulting in lower EOQ calculations. You'll order more frequently with smaller quantities, though investing in additional storage might prove more profitable.

Can I use EOQ for beverages and wine inventory?

Absolutely - EOQ works exceptionally well for beverages due to their long shelf life and stable demand. Wine, beer, and spirits have relatively low storage costs and can handle larger order quantities efficiently.

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ℹ️ This article was prepared based on official sources and professional expertise. While we strive for current and accurate information, the content may differ from the most recent regulations. Always consult the official authorities for binding standards.

Sources consulted

EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
NVWA — Hygiënecode voor de horeca (2024) — Official source
NVWA — Allergenen in voedsel (2024) — Official source
Codex Alimentarius — International Food Standards (2024) — Official source
FSA — Safer food, better business (HACCP) (2024) — Official source
BVL — Lebensmittelhygiene (HACCP) (2024) — Official source

Food Standards Agency (FSA) — https://www.food.gov.uk

The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.

Written by

Jeffrey Smit

Founder & CEO of KitchenNmbrs

Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.

8 years kitchen manager at 1NUL8 Group Rotterdam

Expertise: food cost management HACCP kitchen management restaurant operations food safety compliance

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