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IEOR150F10_hw03 - IEOR 150 Fall 2010 Homework 3 1(10 points...

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IEOR 150, Fall 2010 Homework 3 1. (10 points) Recall that in Problem 3 of Homework 1, we discussed how to combine orders between hex nuts and molly screws. We mentioned that the optimal policy among all possible policies has not been found in that problem. Now we are going to find the optimal policy. Because we have only two products, we have only two possibilities: Order them separately or order them together. The optimal way to order them separately has been found in Part 3(a). In this problem we shall focus on how to optimally order them together. Since we want to order them together, they share the same order cycle time. Denote this common cycle time by T . (a) (2 points) If T is given, what is the annual setup cost for ordering this two products? Your answer should be a function of T . Don’t forget that when you order the two products together, you only need to pay one setup cost. (b) (2 points) If T is given, what is the annual order quantity of hex nuts? What is the corresponding annual holding cost of hex nuts? Express your answers as functions of T . (c) (2 points) If T is given, what is the annual order quantity of molly screws? What is the corre- sponding annual holding cost of molly screws? Express your answers as functions of T .
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