Guide
Supplier MOQ Planner guide
Supplier quotes combine minimum quantities, pack multiples, price breaks, ordering work, and inventory carrying cost. This guide explains the planner's scenario model and its limits.
Problem
A lower unit price can require more average inventory, while smaller orders can create more ordering work. The planner compares those stated tradeoffs; it does not recommend a supplier or authorize a purchase.
Inputs
- Annual demand (D): expected units used or sold in one year.
- Cost per order (S): administrative and operational cost for one order, excluding merchandise.
- Annual holding rate (h): carrying cost as a fraction of inventory value; enter 22 for 22% in the visible form.
- MOQ and case pack: the supplier minimum and required ordering multiple.
- Price tiers: inclusive minimum quantity and unit price.
Use the same unit everywhere; do not mix cases with individual items.
Method
For unit price C, EOQ = sqrt((2 × D × S) / (C × h)). For each price tier, the core tests the packed MOQ/tier floor and the packed maximum of EOQ, MOQ, and tier threshold. At quantity Q, modeled annual total is D × C + (D / Q) × S + (Q / 2) × C × h.
Worked example
Use annual demand 12,000, order cost 85, holding rate 22%, MOQ 240, case pack 24, and tiers 0+ at 12.50, 480+ at 11.80, and 960+ at 11.20.
| Order quantity | Unit price | Modeled annual total |
|---|---|---|
| 240 | 12.50 | 154,580.00 |
| 480 | 11.80 | 144,348.04 |
| 864 | 11.80 | 143,902.03 |
| 888 | 11.80 | 143,901.27 |
| 960 | 11.20 | 136,645.22 |
At 960 units the model gives about 909.9 EOQ, 12.5 orders per year, 0.96 months of supply, 134,400.00 purchase cost, 1,062.50 ordering cost, and 1,182.72 holding cost. The checked-in fixture verifies these numbers against the exact calculator core.
Assumptions
The comparison uses annualized, deterministic demand; all-units tier prices; average cycle inventory of Q/2; a constant ordering cost; and one annual holding-rate estimate.
Limits
Freight, duties, taxes, payment terms, lead time, safety stock, stockouts, obsolescence, storage capacity, defects, returns, financing limits, supplier reliability, currency changes, and demand correlation are outside the model.
Common mistakes
- Entering 0.22 instead of 22 in the percentage field.
- Mixing packs and individual units.
- Reading EOQ as an orderable quantity despite MOQ and pack constraints.
- Treating annual purchase cost as a cash-payment schedule.
- Assuming the highlighted scenario is purchasing advice.
FAQ
Does the lowest modeled row identify the best supplier? No. It is lowest only inside the entered model. Are tier thresholds inclusive? Yes. A 960+ tier applies at 960. Does the model include landed cost? No; add material omitted factors separately.
Use the planner
Open Supplier MOQ Planner, then compare more than one demand scenario and verify the supplier's actual pricing method.
Sources
These references explain general EOQ concepts. They do not validate or endorse this planner; the local fixture validates the example against the product code.