EOQCalculator.com
Wilson EOQ, with the math
Scenario: hospital pharmacy

EOQ for hospital pharmacy under a 99.5 percent service-level constraint

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

Hospital pharmacy EOQ runs against a 99.5 percent cycle-service-level constraint and a next-day wholesaler cadence, so Wilson Q* is almost always smaller than the safety-stock floor. The binding constraint is the ROP, not Q*. EOQ still matters for non-critical items where carrying cost actually drives the decision[1].

Worked example
Refrigerated insulin vial, daily wholesaler delivery, 99.5 percent CSL
Inputs
Annual demand D (vials / year)3,650
Order cost S ($ / order)$8
Unit cost C ($ / vial)$95
Carrying cost i (% / year)35 percent (refrigerated)
H = i * C ($ / vial / year)$33.25
Lead time L (days)1
Daily demand sigma_D (vials)2.5
Z for 99.5 percent CSL2.576
Result
Optimal order quantity
42 units
Annual holding$698
Annual ordering$695
Annual total (ex. purchase)$1,393
Takeaway: Wilson Q* is about 42 vials. Safety stock is Z * sigma_D * sqrt(L) = 2.576 * 2.5 * 1 = 6 vials. ROP = 10 vials per day + 6 = 16. Q* sits comfortably above ROP, so the policy works. The 35 percent carrying cost is dominated by capital and refrigeration.
CSV rowinsulin_vial,3650,8,95,0.35,33.25,42,698,695,1393

USP 797 and 800 storage rules

Compounded sterile preparations under USP 797 and hazardous drugs under USP 800 carry storage-area and segregation requirements that materially raise the fixed cost of carrying inventory. Translate those rules into a higher i (we used 35 percent above rather than the 25 percent default) rather than try to model them as separate constraints on Q.

Daily delivery cadence

A wholesaler that delivers every weekday makes the safety stock low (L is one day) and keeps Q* small. The optimisation question shifts to which items go on the daily JIT pull and which sit on the standing PAR. Standard ASHP guidance treats vital-rare-emergency items as JIT and everything else on PAR levels managed against Q* and ROP[2].

When Wilson is the wrong tool

Vital-rare-emergency items (snake antivenom, antitoxins, dialysis emergency stock). For those, the cost of a stockout is unbounded; the answer is two units on the shelf, period, regardless of Q*. Wilson is for the long tail of routine items where carrying cost is the real decision variable.