The Procurement Glossary » Minimum Order Quantity (MOQ)

Minimum Order Quantity (MOQ)

Inventory & Logistics

Also known as: MOQ

Definition

The smallest quantity a supplier is willing to sell in a single order.

Explanation

MOQs reflect the supplier's production or handling economics. They can force buyers to over-order relative to EOQ, raising inventory. Negotiating MOQs or consolidating orders helps align supply with real demand.

Example

The MOQ of 5,000 units exceeds monthly demand, so the buyer negotiates a smaller MOQ or holds more stock.

Related terms

• Economic Order Quantity (EOQ) — The order quantity that minimises total inventory cost by balancing ordering cost against holding cost.
• Inventory Carrying Cost — The total cost of holding inventory — capital tied up, storage, insurance, obsolescence and shrinkage.
• Negotiation — The discussion between buyer and supplier to agree price, terms and conditions before a contract or order is placed.
• Inventory — The goods and materials a business holds for use, sale or production.

Frequently Asked Questions

What is Minimum Order Quantity (MOQ)?

The smallest quantity a supplier is willing to sell in a single order. MOQs reflect the supplier's production or handling economics. They can force buyers to over-order relative to EOQ, raising inventory. Negotiating MOQs or consolidating orders helps align supply with real demand.

Can you give an example of Minimum Order Quantity (MOQ)?

The MOQ of 5,000 units exceeds monthly demand, so the buyer negotiates a smaller MOQ or holds more stock.

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