lec2 - IE221: Operations Research Probabilistic Methods...

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1 Thu, 30 Aug 2001 IE221: Lecture 2 1 IE221: Operations Research – Probabilistic Methods Module I: Inventory Models Lecture 2, Fall 2001 Lehigh University IMSE Department Thu, 30 Aug 2001 IE221: Lecture 2 2 Lecture 2 Outline n Introduction to IM n The EOQ Model n Basic Model, Assumptions n Derivation, Sensitivity Analysis n Example: Steinarts Pianos n The News Vendor Problem
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2 Thu, 30 Aug 2001 IE221: Lecture 2 3 Probabilistic Inventory Models n GOAL: to minimize costs associated with maintaining inventory and meeting customer demand. n Q: When should an order be placed? How large should each order be? n Ordering and setup costs n Unit purchasing cost n Holding or carrying cost n Stockout or shortage cost Thu, 30 Aug 2001 IE221: Lecture 2 4 The EOQ Model n Demand is uniform n Repetitive ordering (not one -time) n Continuous ordering (continuous review) n Constant lead time
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3 Thu, 30 Aug 2001 IE221: Lecture 2 5 The Basic EOQ Model n NO shortages allowed. I(t)
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lec2 - IE221: Operations Research Probabilistic Methods...

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