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Real-World Applicationshard
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A distributor sells premium widgets. The annual demand D(p)D(p)D(p) for widgets depends on the sale price ppp according to D(p)=a−bp2D(p) = a - bp^2D(p)=a−bp2. The distributor incurs a fixed order cost SSS per order, and a holding cost HHH per widget per year. What is the optimal order quantity Q∗Q^*Q∗ that minimizes total annual inventory cost (ordering + holding cost) at a given price ppp?