Find the optimal inventory policy for the following two-period model by using a discount factor of

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Find the optimal inventory policy for the following two-period model by using a discount factor of  0.9. The demand D has the probability density function

D()

for   0 otherwise,

and the costs are Holding cost $0.25 per item, Shortage cost $2 per item, Purchase price $1 per item.
Stock left over at the end of the final period is salvaged for $1 per item, and shortages remaining at this time are met by purchasing the needed items at $1 per item.

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Introduction To Operations Research

ISBN: 9780072321692

7th Edition

Authors: Frederick S. Hillier, Gerald J. Lieberman

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