Inventory glossary
What is Economic order interval?
Economic order interval is the fixed amount of time between orders that minimizes total ordering and holding costs, used instead of ordering a fixed quantity each time.
Small stores often order on a schedule rather than waiting for stock to hit a trigger point, because it is easier to manage one supplier call or email every few weeks than to track reorder points for every SKU. The economic order interval tells you how long that schedule should be so you are not ordering too often (wasting time and shipping costs) or too rarely (tying up cash in excess stock).
To use it, pick the interval for a supplier or product group, then each cycle review what has sold and order enough to cover demand until the next review plus lead time. This works well when you buy several SKUs from the same supplier together, since it lets you combine them into one purchase order on a set rhythm.
Formula
Example
A candle store sells 20 units a week of its best scent and its economic order quantity works out to 120 units. 120 / 20 = 6 weeks. So the store places an order with that supplier roughly every 6 weeks, adjusting the quantity based on recent sales each time.
Common mistakes
- Treating the interval as fixed forever instead of recalculating when sales speed change.
- Ignoring lead time, so the order is placed too close to running out of stock.
- Using one interval for all suppliers even when their lead times and order minimums are very different.
Economic order interval and SteadyShelf
SteadyShelf forecasts sales per variant and tells you the order-by date per SKU, which works alongside a fixed review interval by flagging which products actually need restocking at each review.
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Related terms
Economic order quantity · Reorder point · Periodic review · Order cycle · Safety stock
FAQ
How is economic order interval different from reorder point?
Reorder point triggers an order whenever stock drops to a certain level, checked continuously. Economic order interval places orders on a fixed schedule regardless of stock level, reviewing and reordering at each set date.
Can one store use different economic order intervals for different suppliers?
Yes. A supplier with a short lead time and low minimum order can be ordered from more often, while a supplier with a long lead time or high minimum order needs a longer interval to make each order worthwhile.
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