E-commerce EOQ with Volume Discount

Blend EOQ theory with supplier quantity breaks so you can decide whether a bulk buy truly lowers total cost. Input your demand, carrying costs, and discount tier to instantly compare scenarios.

Use forecasted annual sales volume for the SKU or bundle
Include admin time, receiving labor, and inbound freight per purchase order
Carrying cost per unit per year, including storage, shrink, and cost of capital
Supplier list price before any quantity breaks
Smallest order quantity that unlocks the discounted unit price
Discounted unit cost once you exceed the threshold

Examples

  • Mid-tier SKU: 12,000 units/year, $45 order cost, $3.20 holding, $18 base price, 1,500-unit break at $17.10 ⇒ 1,382 units
  • Seasonal item: 4,800 units/year, $30 order cost, $2 holding, $12 price, 800-unit break at $11.40 ⇒ 800 units

FAQ

What if there are multiple discount tiers?

Evaluate each tier separately by rerunning the calculator with the relevant threshold and price, then compare the total cost outcomes.

Why adjust the holding cost?

Holding costs scale with the value of stock; discounts and larger batches can change storage, insurance, and obsolescence risk.

Can I enter monthly demand?

Convert monthly demand to an annual number so holding and ordering costs stay aligned with the EOQ formula.

Does the result include supplier lead time?

Lead time affects when you place orders but not the optimal quantity. Pair this result with the Reorder Point calculator to factor in supplier timing.

Additional Information

  • The algorithm compares the classic EOQ output with the quantity break and returns whichever yields the lowest annual total cost.
  • If the discount increases storage space or insurance costs, update the holding cost to reflect the higher carrying burden.
  • Link this with the Inventory Reorder Point tool to translate EOQ into reorder triggers and safety stock buffers.
  • Run the calculation for each additional discount tier to evaluate whether deeper breaks are worth the cash outlay.

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