IEOR150F10_Midterm2 - Department of Industrial Engineering...

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IEOR150 Production System Analysis Midterm Exam 2 Fall 2010 Name: Grade: 1. (15 points; 3 points each) Determine whether the following statements are true or false. CIRCLE or BOX “T” if the statement is true or “F” if it is false. You DO NOT need to provide any explanation. (a) T F When using the ( Q,R ) model to solve inventory problems with stochastic demands, any problem with a positive lead time has an equivalent problem with zero lead time. (b) T F If a ( Q,R ) policy is applied to a periodic review inventory system, there is an equivalent ( s,S ) policy. (c) T F If an ( s,S ) policy is applied to a continuous review inventory system, there is an equivalent ( Q,R ) policy. (d) T F Consider a ( Q,R ) problem of achieving a type 2 service objective β , where β is the fill rate. The minimized total holing and setup cost under the optimal ( Q,R ) policy must be higher if β increases. (e) T F Let G * be the minimized total annual holding and setup cost and e G * be the minimized total annual cost (i.e. including the purchasing cost) under the optimal order cycle time for a given EOQ problem. Suppose we impose the power-of-two constraint and find the corresponding minimized total annual holding and setup cost G 0 and the minimized total annual cost e G 0 . For BOTH pairs of costs, we always have G 0 G * 1 . 0608 and e G 0 e G * 1 . 0608 . 1
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2. (20 points) You have been asked to find a ( Q,R ) inventory policy to control the stock level of a popular product in your company. The marketing department estimated that the weekly demand follows a normal distribution with mean ¯ μ and standard deviation ¯ σ . It takes τ weeks to receive this product after an order is placed. Assume τ is a positive integer. The the unit purchasing cost is c , the setup cost is K per order, and the annual interest rate used
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IEOR150F10_Midterm2 - Department of Industrial Engineering...

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