14 Each month, customers are equally likely to demand 1 or 2 computers from a Pearco dealer....
Question:
14 Each month, customers are equally likely to demand 1 or 2 computers from a Pearco dealer. All orders must be met from current stock. Two ordering policies are under consideration:
Policy 1 If ending inventory is 2 units or less, order enough to bring next month’s beginning inventory to 4 units.
Policy 2 If ending inventory is 1 unit or less, order enough to bring next month’s beginning inventory up to 3 units.
The following costs are incurred by Pearco:
It costs $4,000 to order a computer.
It costs $100 to hold a computer in inventory for a month.
It costs $500 to place an order for computers. This is in addition to the per-customer cost of $4,000.
Which ordering policy has a lower expected monthly cost?
Step by Step Answer:
Operations Research Applications And Algorithms
ISBN: 9780534380588
4th Edition
Authors: Wayne L. Winston