Quiz_3 - (b) The expected inventory cost per month as a...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
02 April 2009 IE 304 OPERATIONS RESEARCH III: STOCHASTIC MODELS QUIZ # 3 Duration: 40 mins Question 1) An appliance store can place orders for refrigerators at the beginning of each month for immediate delivery. A fixed cost of $100 is incurred every time an order is placed. The storage cost per refrigerator per month is $5. The penalty for running out of stock is estimated as $150 per refrigerator per month. The monthly demand is given by the following probability density function: Demand, x 0 1 2 p(x) 0,2 0,5 0,3 The store s policy is that the maximum stock level should not exceed two refrigerators in any single month. Determine the followings: (a) The transition probabilities for different decision alternatives of the problem.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (b) The expected inventory cost per month as a function of the state of the system and the decision alternative. (c) The optimal ordering policy over the next 3 months. Question 2) When I borrow a book from the BU library, I usually try to return it after one week. Depending on the length of the book and my free time, there is a 30% chance that I may keep it for another week. If I have had the book for two weeks, there is a 10% chance that I ’ ll keep it for an additional week. Under no condition do I keep it for more than three weeks. (a) Express the situation as a Markov chain. (b) Determine the average number of weeks I keep the book before returning it to the library....
View Full Document

This note was uploaded on 07/30/2009 for the course INDUSTRIAL 304 taught by Professor Temeldursun during the Spring '09 term at Boğaziçi University.

Ask a homework question - tutors are online