Determine the optimal inventory policy when the goods are to be ordered at the end of every

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Determine the optimal inventory policy when the goods are to be ordered at the end of every month from now on. The cost of bringing the inventory level up to y when x already is available is given by 2(y  x). Similarly, the cost of having the monthly demand D exceed y is given by 5(D  y). The probability density function for D is given by D() e

. The holding cost when y exceeds D is given by y  D. A monthly discount factor of 0.95 is used.

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Introduction To Operations Research

ISBN: 9780072321692

7th Edition

Authors: Frederick S. Hillier, Gerald J. Lieberman

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