BAR Operations · Updated November 2026
EOQ vs Reorder Point: How Much Inventory Should You Order and When?
EOQ answers how much to order. Reorder point answers when to order.
Economic order quantity
EOQ estimates the order size that balances annual ordering costs with annual inventory carrying costs under the model's assumptions.
Reorder point
The reorder point is the inventory level at which a new order should be placed based on demand during supplier lead time.
Safety stock
Safety stock provides a buffer against uncertainty in demand or delivery timing.
Model limitations
Real inventory systems can include quantity discounts, variable demand, uncertain lead times, capacity constraints, and stockout costs beyond the basic model.
The takeaway
EOQ balances ordering and carrying costs. Reorder point reflects expected demand during lead time plus any planned safety stock.
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FAQ
Does EOQ answer when to order?
No. It answers how much.
Does reorder point use lead-time demand?
Yes.
Can safety stock increase the reorder point?
Yes.