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Essay text:
Keeping inventory is consequently a costly operation for any business. Therefore many attention has been given in optimal decisions for inventory management, where holding costs of carrying inventory is weighed against ordering costs of placing new orders. This optimal decision making is based on the economic order quantity of an organisation.
When placing new orders, many companies sometimes neglect the impact of hidden costs and advantages on optimal purchasing decisions. An instance is the transportation cost associated with the delivery of orders. Most companies assume transportation costs fixed per delivery, without knowing the exact impact of the number of units ordered on the transportation cost...
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