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What if your product is made from materials that are in limited supply and require special or expensive storage facilities? In such a situation, you have to keep purchasing and inventory costs down, but still kep enough stock to meet demand. If you use perishable resources or materials subject to supply limitations, you may encounter problems like this one.
Objective of Optimization:
The objective in the Inventory model is to minimize the total cost and determine how much material to buy from each source in each time period to meet customer demand at lowest purchase and holding cost.