HW Due 12-6 Stochastic DP

HW Due 12-6 Stochastic DP - Demands not satisfied are...

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HW Due 12-6 Stochastic DP 4. Consider a 2 period stochastic production model with a production limit of 5 units per period and an inventory carry over limit from period to period of 4 units. The production setup cost is $18 (independent of the number produced excluding 0), each unit costs $100, the holding cost is $3 per unit per period based on out-going inventory , and unfilled demands are assessed a cost of $200 per unit.
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Unformatted text preview: Demands not satisfied are lost (not carried over to future periods) and if inventory exceeds the limit of 4 units in any period, then these excess units are sold off at a price (income not cost) of $25. Demand in each period is a random variable with distribution: 10% 1, 25% 2, 35% 3, and 30% 4. Solve this problem assuming that there is no initial inventory....
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