Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question
Chapter 4, Problem 87P
a)
Summary Introduction
To determine: The way to minimize the total cost incurred during the period of the next 4 quarters.
Linear programming:
It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.
b)
Summary Introduction
To use: The solver table to identify the increase of total cost due to the increase of required capacity at the end of quarter 4.
Linear programming:
It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.
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CWD Electronics sells Televisions (TV), which it orders from the USA. Because of shipping and
handling costs, each order must be for 10 TVs. Because of the time it takes to receive an order, the
company places an order every time the present stock drops to 5 TVs. It costs $50 to place an
order. It costs the company $200 in lost sales when a customer asks for a TV and the warchouse
is out of stock. It costs $50 to keep each TV stored in the warehouse. If a customer cannot purchase
a TV when it is requested, the customer will not wait until one comes in but will go to a competitor.
The following probability distribution for demand for TV has been and the time required to
recæive an order once it is placed (lead time) has the following probability distribution:
Lead time (weeks) Probability
Demand/
week
Probability
0.45
0.15
2
0.30
025
0.25
3
0.40
020
The company has 10 TVs in stock. Orders are always received at the beginning of the week.
Note that a lead time of 2 weeks imply that an…
CWD Electronics sells Televisions (TV), which it orders from the USA. Because of shipping and handling costs, each order must be for 5TVs. Because of the time it takes to receive an order, the company places an order every time the present stock drops to 5 TVs. It costs $50 to place anorder. It costs the company $500 in lost sales when a customer asks for a TV and the warehouse is out of stock. It costs $100 to keep each TV stored in the warehouse. If a customer cannot purchase a TV when it is requested, the customer will not wait until one comes in but will go to a competitor.The following probability distribution for demand for TV has been and the time required to receive an order once it is placed (lead time) has the following probability distribution: (Attached)
The company has 3 TVs in stock. Orders are always received at the beginning of the week.Note that a lead time of 2 weeks imply that an order placed in week one will arrive in week 4.
The time required to receive an order…
FRUIT COMPUTER COMPANY
Fruit Computer Company manufactures memory chips in batches of ten chips. From past experience, Fruit knows that 80% of all batches contain 10% (1 out of 10) defective chips, and 20% of all batches contain 50% (5 out of 10) defective chips. If a good (that is, 10% defective) batch of chips is sent to the next stage of production, processing costs of $4000 are incurred, and if a bad batch (50% defective) is sent on to the next stage of production, processing costs of $16000 are incurred. Fruit also has the alternative of reworking a batch at a cost of $4000. A reworked batch is sure to be a good batch. Alternatively, for a cost of $400, Fruit can test one chip from each batch in an attempt to determine whether the batch is defective.
QUESTIONS
1.Determine a strategy so Fruit can minimize the expected total cost per batch.
2.Compute the EVSI and EVPI.
Chapter 4 Solutions
Practical Management Science
Ch. 4.2 - Prob. 1PCh. 4.2 - Prob. 2PCh. 4.2 - Prob. 3PCh. 4.2 - Prob. 4PCh. 4.2 - Prob. 5PCh. 4.2 - Prob. 6PCh. 4.3 - Prob. 7PCh. 4.3 - Prob. 8PCh. 4.3 - Prob. 9PCh. 4.3 - Prob. 10P
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