# hmwk5 - ISyE 3232 Stochastic Manufacturing and Service...

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

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ISyE 3232 Stochastic Manufacturing and Service Systems Spring 2011 J. Dai and H. Ayhan Homework 5 February 2, 2011 Due: at the start of class on Tuesday, Feb. 15 1. Next months production at a manufacturing company will use a certain solvent for part of its pro- duction process. Assume that there is an ordering cost of \$1,000 incurred whenever an order for the solvent is placed and the solvent costs \$40 per liter. Due to short product life cycle, unused solvent cannot be used in following months. There will be a \$10 disposal charge for each liter of solvent left over at the end of the month. If there is a shortage of solvent, the production process is seriously disrupted at a cost of \$100 per liter short. Assume that the initial inventory level is x , where x = 0, 100, 300, 500 and 700 liters. (a) What is the optimal ordering quantity for each case when the demand is discrete with Pr { D = 500 } = Pr { D = 800 } = 1 / 8, Pr { D = 600 } = 1 / 2 and Pr { D = 700 } = 1 / 4?...
View Full Document

Ask a homework question - tutors are online