1999exam1 - • Selling price is $100/unit • Any units...

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IE 221 OPERATIONS RESEARCH - PROBABILISTIC MODELS EXAM 1 FALL 1999 1 . .. Given the following data: K = $350 h = $0.3/$-yr p = $9 D = 25500/yr. (a) Determine the optimal economic order quantity (EOQ). (b) Determine a range of values for D such that the total annual cost will be within 5% of optimal if the EOQ of part (a) continues to be used. (c) Determine how much of a special purchase should be made, if any, if the price is about to increase by 50%. 2 . .. Neighborhood Hardware acts as a central buying agent for a large number of retail hardware outlets in the Midwest. The product line is divided into 6 major categories, with a different buyer responsible for each single category. One category is home outdoor equipment. The buyer for this group seeks assistance with regard to the acquisition of a particular type of small snowblower that must be ordered several months before the winter. Certain data is available: Unit acquisition cost is $60.
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Unformatted text preview: • Selling price is $100/unit. • Any units unsold at the end of the winter are marked down to $51 which assures that they will be sold. • Forecasted demand for the coming winter season: Hundreds of units, k 3 4 5 6 7 8 Prob(k) 0.1 0.1 0.4 0.2 0.1 0.1 (a) To maximize profits, how many units should the buyer acquire? (b) What is the expected profit? 3 . .. Inventory control system parameters are to be established using the following data: K = $200 h = $2/unit-week L = 3 weeks R = 4 weeks E(D) = 550/week σ (D) = 300 (weekly demand is Normally distributed) Demand not met directly from inventory is lost to a competitor. (a) Given that SLM1 = 0.99, determine an optimal safety stock and order-up-to-level for the control system. (b) Assume R = 0 and the corresponding reorder point is 4000. Determine an order quantity such that SLM1 = Prob{system has insufficient inventory in any given cycle}. Note: SLM1 not necessarily .99!!...
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