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In Operations Research, we build models to penalize the firm for its supply - demand mismatch. In the case of excessive inventory ( i .
In Operations Research, we build models to penalize the firm for its supplydemand
mismatch. In the case of excessive inventory ie D the firms incurs an overage
cost of SGD per each unit of excess inventory. In the complementary case of inventory
shortage, the firms incurs an underage cost of SGD per each unit of unmet demand. The
firms operational cost is the sum of its overage and underage cost.
Compute the expected operational cost incurred by the firm.
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