Abstract:
Based on the relationship between buyers and suppliers, it is economical to integrate inventory management model and their activities. This information may be captured by the economic order quantity EOQ model to minimize cost and wastage. Previous researches have focused more attention to modeling these relationships between a single buyer and seller in a homogenous setting. However, this project extends this problem to one supplier to many distributors by using convolution technique of normally and uniformly distributed cases. Industries had to maximize the tradeoff between customers satisfaction and lost due to value depreciation of their products stocked in inventory, hence this research. This research aims to minimize this risk and lost using convolution technique to obtain EOQ. Furthermore, it utilizes the idea of convolution of multiple random variables to determine the EOQ for a single production. Data were obtained from Dangote Ware House deport and the economic order were determined. It was noticed that the total setup cost (A) and holding cost (H) significantly determines the pattern of the economic order quantity. It was discovered in economic order quantity for normally convoluted variables, that the higher the replenishment time the higher the economic orders. In other words, they are inversely related. It can also be seen that the replenishment time for Dangote cement warehouse serving 13 customers were averaged to 4 days. Also, it takes an average of 4 days before the warehouse places an order. Total set up and holding cost have a significant effects on the economic order quantity. It was noticed that the size of A and H significantly determines the pattern of the economic order quantity. Furthermore, it was observed that the values of total setup cost and holding cost have a multiplicative effect on the economic orders.
