BIZOMAT Tools · Quoting
Minimum Order Quantity Check
What does the supplier MOQ do to your inventory economics?
Shows how many months of demand a supplier’s minimum order quantity represents, the cash it ties up and its holding cost, and checks shelf life.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Minimum order quantity | units | Supplier’s minimum order quantity |
| Expected monthly demand | units | Expected monthly usage |
| Unit purchase cost | $ | Unit purchase price |
| Annual carrying cost rate | % | Annual carrying-cost rate from finance |
| Shelf life or obsolescence horizon (0 = not limited) | months | Shelf life or obsolescence horizon (0 if not limited) |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Minimum order quantity
- What it is
- The smallest quantity the supplier will accept in one order, from its quotation or terms of trade.
- Units and format
- Enter a number in units: a count of units. The form accepts 1 units or more.
- Example
- The form opens with 5000 units as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Months of stock, money tied up and holding cost all rise in proportion.
- Get it right
- Check whether the MOQ is per part number, per colour or per order; it changes how much stock you take.
What this means: Expected monthly demand
- What it is
- How many units you expect to use or sell in a typical month, from the forecast or recent usage.
- Units and format
- Enter a number in units: a count of units. The form accepts 0.01 units or more.
- Example
- The form opens with 1000 units as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Higher demand reduces the months of stock the MOQ represents.
- Get it right
- Use expected usage of this exact item, not of the product family.
What this means: Unit purchase cost
- What it is
- The price paid to the supplier for one unit at the MOQ quantity.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $2.5 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Money tied up and holding cost rise in proportion.
- Get it right
- Use the landed cost if freight and duty are significant.
What this means: Annual carrying cost rate
- What it is
- The yearly cost of holding stock as a percentage of its value: capital, storage, insurance, handling, damage and obsolescence.
- Units and format
- Enter a number in %: percent: the number is read as a percentage, so type 8 for 8 %. The form accepts 0% to 100%.
- Example
- The form opens with 20% as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Holding cost rises in proportion.
- Get it right
- Ask finance for the rate. Type the percentage (20 for 20 %).
What this means: Shelf life or obsolescence horizon (0 = not lim…
- What it is
- How long the item can be held before it expires, degrades or becomes obsolete, from the shelf life or the product’s remaining market life.
- Units and format
- Enter a number in months: months. The form accepts 0 months or more.
- Example
- The form opens with 0 months as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Does not change cost; it sets whether the shelf-life check passes.
- Get it right
- 0 means not limited and skips the check. Otherwise, more months of stock than this flags EXCEEDS SHELF LIFE.
Method and formulas
- Months of stock = MOQ ÷ monthly demand
- Holding cost = (MOQ value ÷ 2) × carrying rate × months ÷ 12 (stock consumed evenly)
Limitations
- Even consumption assumed
- Price breaks are not modelled
Typical uses
- Negotiating MOQs
- Approving large one-off buys
Who it is for
- Purchasing staff
- Inventory planners
What you get
- Months of stock
- Value tied up and holding cost while consumed
- Shelf-life check
Interpreting the result
- More than about six months of stock warrants negotiation or call-off terms
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.