EOQ vs MOQ: reconciling supplier minimums with Wilson
When supplier MOQ exceeds Wilson Q*, the Wilson U-curve flatness means ordering MOQ costs only a few percent more than the unconstrained optimum, as long as MOQ stays under roughly 2x Q*. Above that, negotiate, split suppliers, or escalate to a price-break model[1].
The cost-penalty function
The cost penalty of ordering Q instead of Q* is symmetric and convex. The exact ratio:
Decision tree
- MOQ within 1.5x Q*: order MOQ. The 8 percent penalty is usually less than the cost of switching supplier or paying expedite to a smaller-MOQ alternative.
- MOQ between 1.5x and 2x Q*: negotiate. Suppliers often have an unposted floor below the published MOQ; the question is how often you reorder, not whether you can.
- MOQ over 2x Q*: split across two suppliers or escalate to the quantity-discount calculator and treat the MOQ as a tier breakpoint that has to clear the all-in cost test.
- MOQ over 3x Q*: the working-capital lock-up usually dominates. Change supplier, or finance the inventory with a revolving line so the cash cost matches the carrying-cost calc.
Negotiation framing
Walk in with the U-curve flatness chart and your computed Q*. Tell the supplier the smaller order is more frequent (your math says four orders a year instead of two), which improves the supplier’s cash conversion too. MOQs are sticky because suppliers under-cost their own setup, not because the floor is real.
Splitting across suppliers
Two suppliers at MOQ_A and MOQ_B with shipping costs S_A and S_B can sometimes total to less than one supplier at MOQ_A alone, if MOQ_A is far above Q*. The trade is a doubled per-order setup against halved per-supplier MOQ. Worth modelling explicitly for any SKU where MOQ is more than 2x Q*.