Study of EOQ-based inventory and transportation

Nowadays, enterprises survive in a competitive environment. Logistics is looked as “the third profit source” which has big potential in reducing the cost of operations. Especially inventory and transportation occupy a considerable proportion in logistics cost. So reduce the cost becomes the key to reduce it. However, China´s enterprises consider how to reduce transport cost or inventory cost only, ignoring the relation between the two parts, making the logistics systemic operating cost high. The paper takes full consideration of antinomies of transportation and inventory cost and use systemic thinking to low the operating cost in order to provide a solution to the two costs.