Estimation of Economic Order Quantity for the Deterministic Inventory Model with Constant Demand

Abstract

The optimal inventory quantity model with continuous demand is developed in this study. Controlling inventory is generally a key component of a successful business operation for any company that purchases and resells goods. For this reason, we create a mathematical inventory model that includes fixed transportation costs, decreasing holding costs, and shortage costs. The buyer's economic order quantity and the lowest possible total inventory cost are obtained. And also, we focus on the manufacturer - buyer inventory cost, which makes more profit. This model shows that determination of saving percentage when holding cost and shortage cost increases, which gives more benefit for buyer comparing with manufacture.