Stochastic

# Since it is impossible to sell 4 units in a day and

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Unformatted text preview: e of 1800 · 82/8910 = 16.56 parts of type 1. Similarly type 2 and type 3 parts are used at the long run rates of 150/8910 and 188/8910 per day, so over 1800 days we will use an average of 30.30 parts of type 2 and 37.98 parts of type 3. Example 1.24. Inventory chain (continuation of 1.6). We have an electronics store that sells a videogame system, with the ptential for sales of 0, 1, 2, or 3 of these units each day with probabilities .3, .4, .2, and .1. Each night at the close of business new units can be ordered which will be available when the store opens in the morning. Suppose that sales produce a proﬁt of \$12 but it costs \$2 a day to keep unsold units in the store overnight. Since it is impossible to sell 4 units in a day, and it costs us to have unsold inventory we should never have more than 3 units on hand. Suppose we use a 2,3 inventory policy. That is, we order if there are 2 units and we order enough stock so that we have 3 units at the beginning of the next day. In this case we always start...
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## This document was uploaded on 03/06/2014 for the course MATH 4740 at Cornell.

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