ABSTRACT
Assume that a business has a deterministic demand for a particular item. The following cost considerations hold for the stockroom: Annual cost to buy enough inventory order inventory and hold inventory. The stockroom could buy enough inventories for the entire year in one large order, small total ordering cost, large total holding cost, or in many small orders over the year, large total ordering cost, small total holding cost. Formulate the inventory decision to determine the Economic Order Quantity (EOQ) which will minimize Acme's total annual cost for ordering and holding the inventory. The objective of the inventory decision is to minimize the Total Annual Cost (TCQ) of ordering and holding tires required to meet the demand. Two solution methods will be demonstrated to determine the EOQ which minimizes the TCQ function consisting of the cost of ordering and holding inventory: Trial and Error Approach and Calculus Approach.
