Real-World Applicationshard
0:00.0

A distributor sells premium widgets. The annual demand D(p)D(p) for widgets depends on the sale price pp according to D(p)=abp2D(p) = a - bp^2. The distributor incurs a fixed order cost SS per order, and a holding cost HH per widget per year. What is the optimal order quantity QQ^* that minimizes total annual inventory cost (ordering + holding cost) at a given price pp?