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# Hayes Electronics assumes with certainty that the ordering cost is \$450 per order and the inventory carrying cost is \$170 per unit per year.

Hayes Electronics assumes with certainty that the ordering cost is \$450 per order and the inventory carrying cost is \$170 per unit per year.  However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty.  Consider four cases of variation in the model parameters as follows:  (a) both ordering cost and carrying cost are 10% lower than originally estimated.  (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated.  Determine the optimal order quantity and total inventory cost for each of the four cases.  Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.

Using Excel, Determine the following:
Hayes Electronics assumes with certainty that the ordering cost is \$450
per order and the inventory carrying cost is \$170 per unit per year.
However, the inventory model parameters are frequently only estimates
that are subject to some degree of uncertainty. Consider four cases of
variation in the model parameters as follows: (a) both ordering cost
and carrying cost are 10% lower than originally estimated. (b) both
ordering cost and carrying cost are 10% higher than originally
estimated, (c) ordering cost is 10% higher and carrying cost is 10%
lower than originally estimated, (d) ordering cost is 10% lower and
carrying cost is 10% higher than originally estimated. Determine the
optimal order quantity and total inventory cost for each of the four
cases. Prepare a table with values from all four cases and compare the
sensitivity of the model solution to changes in parameter values.

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