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Ch 5 (Uncertainty of Demand)
R. R. Lindeke
IE 3265, Production And
Operations Management
G (Q) Co Q x) f x dx Cu x Q ) f x dx
Here: f(x) is a probability density function
controlling the behavior of ordering
Co
Continuing:
Continuing:
Q*
Newsboys Extensions
Assuming
This
Describing Demand
Decision Variables
2 ( K pn( R))
Q
h
1 F ( R) Qh / p
Solution Procedure
1)
2)
Computations
For
Comparison of Service
Objectives
Although
Comparison (continued)
Order Cycle
1
180
2
75
3
235
4
140
5
180
6
200
7
150
8
90
9
160
10
40
Demand
Stock-Outs
0
0
45
0
0
10
0
0
0
0
For a type 1 service objective there are two cycles out of ten in which a stockout
occurs, so the type 1 service level is 80%. For type 2 service, there are a total
of 1,450 units demand and 55 stockouts (which means that 1,395 demand are
satisfied). This translates to a 96% fill rate.
n( R1 ) 1 * Q0 63.25
L Z1
n( R1 )
63.25
.3673
172.8
Z1 .065 & 1 F R =.474 from Table A4
Q1
n( R1 )
1 F R
Q1 63.25
.474
n( R1 )
EOQ
2
1265 63.25
2
.474
1 F R
1405
n R2 1 Q1 .05*1405 70.25
L Z 2 70.25
0.408
172.8
Z 2 0.02 & 1 F ( R2 ) 0.508
R2 Z 2 1397
Q2 70.25
.508
1265
70.25
.508
n R3 0.05*1411 70.54
L Z 3 70.54
172.8
0.4097
Z 3 .02
R3 Z 3 1397 SAME so Stop!
Q, R = 1411, 1397
1411
(s, S) Policies
If u s, order S u
If u s, don't order