hw3-sol - ISyE 4803 - Homework 3 Solutions Due: October 6,...

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Due: October 6, 2009 (23 Points) NOTE: In answering these questions, do not copy-paste text from the articles. Use your own words. 1. (4 points) Please refer to the Waffle House Case Study and answer the following questions (Problem 4.4): Based on your analysis in Problem 3 of Homework 2 (Problem 4.3 of the Waffle House Case Study), answer the following questions: a. (1 points) Suppose once again that your operations management team estimates from experience that the region is likely to be without electricity for three days following a storm and that lost profits are $5,000 per day. How many generators should be purchased to minimize the maximum regret? The minimum of the maximum regret of this case is achieved with the purchase of 15 generators. This leads to a maximum regret of $15000. b. (1 points) What is the impact of your decision about the number of generators to purchase if electricity is actually out for four days? If the electricity is actually out for 4 days instead of 3, then the maximum regret function will be ( ) ( ) ( ) D Q Q D - - * 1000 , * 19000 max . With the decision of purchasing 15 generators in the beginning of the season gives a maximum regret of $19000. And the minimum is achieved with 16 generators, with maximum regret of $16000. This change leads to the purchase of 1 extra generator compared to the case of part a. c. (2 points) What are the advantages and disadvantages of using a model that minimizes maximum regret in determining how many generators to procure? This objective ensures that we will never be worse than the maximum regret of the decision chosen, given that it is minimizing the possible maximum loss in each case of Q. But it is very sensitive to the inputs: lost profit per day and days with power outage after a hurricane attack and possible total demand (maximum D). And this model may be too conservative, because the cost of underage is much
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hw3-sol - ISyE 4803 - Homework 3 Solutions Due: October 6,...

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