---
title: "Define economic order quantity"
subject: "Construction Management"
chapter: 3
key: "semester_8/construction_management:define-eoq"
source: https://www.bctengineer.com/q/semester_8/construction_management/define-eoq
site: BCT Engineering
---

# Define economic order quantity

Construction Management · Chapter 3: Planning Construction Material

- Asked in: 2078 Chaitra, 1 marks
- Video: [What is Economic Order Quantity(EOQ)? | Graph, Formula #eoq](https://www.youtube.com/watch?v=zjPhkXwGZgs) — Educationleaves
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/define-eoq
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-3

## Question

Define EOQ (economic order quantity).

## Short answer

EOQ is the order quantity that minimizes the sum of annual ordering and carrying costs. It is computed as sqrt(2DC_o/C_h), where D is annual demand, C_o ordering cost per order, and C_h holding cost per unit per year.

## Answer

**Economic Order Quantity (EOQ)** is the quantity of material to be ordered each time that gives the lowest total of ordering cost and carrying (holding) cost per year. It is $EOQ=\sqrt{2DC_o/C_h}$, where $D$ is annual demand, $C_o$ ordering cost per order and $C_h$ carrying cost per unit per year.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. EOQ is the order quantity that gives the lowest total of:
   A. purchase cost and tax
   B. ordering cost and carrying cost per year
   C. labour and material cost
   D. shortage and transport cost
   Answer: B. EOQ minimizes ordering plus carrying (holding) cost. (Key point: Meaning of EOQ)

2. Which formula gives EOQ?
   A. sqrt(2 D Co / Ch)
   B. sqrt(D Co / 2 Ch)
   C. 2 D Co / Ch
   D. sqrt(2 Ch Co / D)
   Answer: A. EOQ = sqrt(2DCo/Ch). (Key point: EOQ formula)

3. In the EOQ formula, Ch stands for:
   A. cost per order
   B. carrying cost per unit per year
   C. annual demand
   D. lead time
   Answer: B. Ch is the holding cost per unit per year; Co is the ordering cost per order. (Key point: Meaning of terms)

## Related in Construction Management

- [Material classification, EOQ, GiT and re-order level](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aclassification-eoq-gitt-2079) — Construction Management, chapter 3
- [EOQ and reorder point for rebar](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aeoq-rebar-2071) — Construction Management, chapter 3
- [ABC categories and EOQ of cement](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aabc-eoq-cement-2070) — Construction Management, chapter 3

## Related in other subjects

- [Derivation of economic order quantity](https://www.bctengineer.com/question.md?key=semester_6%2Findustrial_engineering_and_management%3Aeoq-model-derivation-and-assumptions) — Industrial Engineering and Management, chapter 4
- [EOQ, total cost and reorder point numerical](https://www.bctengineer.com/question.md?key=semester_6%2Findustrial_engineering_and_management%3Aeoq-numerical-reorder-point) — Industrial Engineering and Management, chapter 4