The Economic Order Quantity (EOQ) Model formula is a decision tool used to determine the optimum quantity of products that an organization should order at a given time in order to meet customer demand while minimizing costs associated with ordering, storing and replacing inventory. The EOQ Model formula takes into account factors such as fixed costs of ordering, holding cost per unit item and demand rate. By using these factors, companies are able to effectively forecast their future inventory needs and reduce waste associated with over- or under-stocked inventory. By calculating their EOQ, businesses can both save money on ordering and storage costs, as well as improve customer service by ensuring that the right products are in stock when customers need them.