The Economic Quantity Order Formula (EOQ) is a model used to calculate the optimal inventory order quantity—or the number of units that can be ordered at a single time—in order to minimize cost. This formula takes into account both ordering costs, such as transport fees and administrative costs, as well as holding costs, such as warehouse rent and insurance. By utilizing the EOQ model, businesses are able to make smarter inventory investment decisions, leading to lower overheads and higher profit margins.