Economic Order Quantity for Seasonal Yarn Sourcing

The formula

This is the expression the tool evaluates. Every term is named underneath, with the unit it must be supplied in.

How the result is derived

Step by step, from the values you type to the figure on screen.

1. The 7 inputs are read from the form on every keystroke: Annual Demand, Cost per Order, Yarn Price, Holding Cost Rate, Moisture Loss, Bulk Discount Threshold and Bulk Discount.
2. Each value is checked against the accepted range in the input table below. A value outside its range stops the calculation rather than producing a misleading figure — the results blank out and a message appears.
3. The validated values are substituted into the expression above, which resolves Economic Order Quantity together with every supporting figure in one pass — no value is carried over from a previous entry.
4. The supporting outputs — Holding Cost, Orders per Year, Annual Ordering Cost, Annual Holding Cost, Total Inventory Cost and Bulk Discount Advantage — come from the same pass, so they always describe the same case as the headline figure.
5. Results are rounded for display only. The full-precision value is used throughout the chain, so reading a rounded intermediate figure back into the tool by hand can shift the last digit.

What each input means

Where to read each value on the floor, the unit it must be in, and the range the tool accepts.

What the tool returns

The headline figure and every supporting value it is built from.

Worked example

The tool loads with this case already solved — the Economic Order Quantity shown above is its answer. Change one value and the difference from this baseline is the sensitivity of the result to that variable.

How to use it

1. Work through the input groups in order — Demand & Ordering and Holding & Discount. The defaults are a realistic case, so you can change one value at a time and watch what moves.
2. There is no calculate button. Every figure recalculates as you type or drag, which is what makes this usable for a what-if sweep rather than a single answer.
3. Read Economic Order Quantity in the dark results panel — that is the headline figure, expressed in kg.
4. Check the supporting rows underneath (Holding Cost, Orders per Year, Annual Ordering Cost, Annual Holding Cost, Total Inventory Cost and Bulk Discount Advantage) before acting on the headline — they are where an implausible input usually shows itself first.
5. Reset to defaults returns every field to the reference case, which is the quickest way to check whether a surprising result came from the tool or from an input you had changed earlier.

Where this is used

• Process planning — establishing Economic Order Quantity before a trial is booked, so machine time and material in Supply Chain, Inventory & Logistics are committed against a calculated figure rather than an estimate.
• Costing and quotation — Economic Order Quantity is an input to the cost sheet, and quoting from a worked number rather than a remembered one is what keeps a margin intact.
• Troubleshooting — when the floor result drifts from plan, entering the measured values (starting with Annual Demand) shows how much of the gap in Economic Order Quantity each variable explains.
• Teaching and study — the accepted ranges bracket normal Supply Chain, Inventory & Logistics practice, so moving one variable at a time shows the shape of the relationship rather than a single answer.

Assumptions and limits

• EOQ assumes steady demand and instant replenishment, and seasonal yarn sourcing satisfies neither — a season with a demand peak and a long lead time needs a build-ahead plan, not a reorder quantity, and EOQ is then only a sanity check on batch size. The bulk advantage compares one discount threshold against the EOQ and ignores the shade-lot risk that large batches carry, which for dyed or melange yarn frequently outweighs the discount. Moisture loss is treated as pure shrinkage of saleable weight; where yarn is sold on conditioned weight the term belongs at a different value or not at all.
• Every input is bounded to the range normal practice occupies (Annual Demand 100 to 10000000 kg, Cost per Order 1 to 10000 /order and Yarn Price 0.1 to 100 /kg, and so on for the rest). Those bounds are guard rails against typing errors, not a claim that the formula fails one unit outside them.
• The calculation is deterministic: the same inputs always give the same result. It carries no allowance for machine condition, operator skill, ambient conditions or lot-to-lot material variation unless an input above explicitly represents one.
• Nothing is sent anywhere. The maths runs in your browser, so the numbers you type never leave the page.

Questions people ask