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Wilson EOQ, with the math
Playbook

EOQ vs MOQ: reconciling supplier minimums with Wilson

By Oliver Wakefield-Smith, Founder, Digital Signet
Direct answer

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:

cost penalty of off-optimum Q
TC(Q) / TC(Q*) = 0.5 * ( Q/Q* + Q*/Q )
At Q = 2 Q*, penalty = 1.25 (25 percent). At Q = 1.5 Q*, penalty = 1.083 (8.3 percent).

Decision tree

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*.