Juan has a profitable web business of wiling I shins priced

Juan has a profitable web business of wiling I -shins priced at S2S each. His demand is pretty steady throughout the year (his website is up and running 36S days a year), approximately normally distributed with a mean of 30 T-shirts/day and a standard deviation of 10 T-shirts/day. He has a supplier in China that charges him 5per T-shirt and a flat rate of 150 every time he places an order. Orders take exactly 50 days to arrive by container ship. His calculates his annual per unit holding costs at 20% of the wholesale cost of T-shirts.

Solution

The inventory management problem is a EOQ moel with continuous demand distribution.

Because the demand is uniform over the year. hence it EOQ model with uniform demand