Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

BASF sells customized petrochemical catalysts that are produced in a plant in Germany. Many of their customers are in North America and transportation is

image text in transcribedimage text in transcribed

BASF sells customized petrochemical catalysts that are produced in a plant in Germany. Many of their customers are in North America and transportation is done via ocean carrier. They can purchase container capacity in advance at the price of $3000 per container. However, if they advance purchase containers, they bear the risk of not knowing their exact needs for containers. In particular, here is a forecast of their needs for June (i.e., a density and distribution function): Q f(q) 0 0.1810 F(Q) 0.0952 Q f(q) F(Q) 11 0.0.201 0.8997 1 0.1482 0.2592 12 0.0164 0.9179 2 Q.1213 0.3935 13 0.0134 0.9328 3 0.0993 0.5034 14 0.0110 0.9450 4 0.0813 0.5934 15 0.0090 0.9550 5 0.0666 8.6671 16 0.0074 0.9631 6 0.0545 0.7275 17 0.0060 0.9698 7 0.0446 0.7769 18 0.0049 0.9753 8 0.0365 0.8173 19 0.0040 0.9798 9 0.0299 0.85.04 20 0.0033 0.9834 10 0.0245 0.8775 If they purchase a container in advance and don't actually need it, then they will fill it with some excess "filler" product and store it in North America until it can be sold. The expected extra storage cost is $750 per container. For example, if their needs are for 2 containers but they advanced purchased 3 containers, then they ship all three containers and incur an extra $750 charge for the 1 container filled with "filler" product. Containers purchased on the spot market (after they learn their needs) are expected to cost $5000 per container. For example, they may advance purchase 1 container but discover that they need 3 containers, in which case they would purchase an additional 2 containers at $5000 each. How many containers should they advance purchase to minimize their costs? Report your answer as an integer.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Methods For Business

Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Cam

11th Edition

978-0324651812, 324651813, 978-0324651751

More Books

Students also viewed these General Management questions

Question

What is a font and why do we care?

Answered: 1 week ago

Question

14. Let X be uniform over (0, 1). Find E[X|X Answered: 1 week ago

Answered: 1 week ago