10 Sunday 24 Jan 2021

65 F
Contents
Attendance
start recording
Assignments 6 Readingassignment
Revision Plan
Final Exam requirements preparations
conditional Pay off Tables
Revision Plan
before session
Revisions 11 and

prepare questions to ask

Arrange your notes and have them available to make
additional comments when needed
The revision session will cover at least
example one

for each topic and provides a summarized set of steps

Problems solved in the revision session are
notte
ina questions only intended to
They are
stimulate and recover what
yourthinking you may
have missed

Topics to cover
Formulation
Graphical Method
Simplex w out ti d variables
simplex Big M
w x x

Transportation Model 1 2

Conditional Pay off Tables I 2

2 Hours
General Requirements
Good and stable internet connection
s of whitepaper i your name on each at the topright corner
Question at the topleft corner
pages of in the top center
leave blank untilfullydone
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A smile I
Calcultor

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 Ex calculate the expected grade
A 60 90
B 30 80
C 8 70
D F 2 o

of times the event occurs

P X tnn d total of tines for all events in
the population
ex what is the propability that I would randomly
select a student to present a case male
n total of students
m of male students 18

PLmale I n z m

ofKx s
 o
E P El Xiao 100

A I a I3s
Etf 195 7

G t tD G 7

ex s 7 9 0

E weights L

s
f 7
f 9 weighted

Average
Expected value
EX 3 investment opportunities
A 10,000 40 ECInvestments
B S ooo 30 0.440,000
C 1,000 30 0.315,000
2

100 to 3L 1,000
 Conditional Pay off Tables

EXI conditional Pay off Ccpo

A bakery shop prepares cakes in the

early hours of each
day to meet the expected demand of the The day
cost of preparation is approximately 70 Pounds per cake
and sells for 120 Pounds during the working hours
Unsold cakes at the end of the cut packed and
day are

frozen The frozen products are then shipped to a

nearby supermarket and sold at 40 Pounds per full cake
The cost of cutting packing andfreezing is 2 Pounds per
cake and the shipping cost is 3 Pounds The expected
cost of losing a customer is estimated at 10 Pounds per
unit of shortage Demand expected
during the day is
10 12 14 or 16 units with propabilities of 10 30
20 and 40 respectively

How
many the baker prepare everyday
cakes should
such that the
pay off
is maximized
P 120 C 70 i s e 40 l to X 1
Casely s Cpo 50 D 35 Q D
Q 3D

Cased CPO 50 Q 60 D Q
QLD
Cased CPO P c D K e e Q D
Q 3D

CPO LP c Q X ftp.d l D Q
asE

Determining the value of X

Determine whether or not to take the cost of shortage
in consideration

Nothing in the case

give indication Default A 2
Competition Strong comp 1 0
Poor Comp X I
Explicitly stated Take in cosideration 1 1
Not takeni i t o

d is given X I

Q Expededretu

g
16

I
iz
J
14
I
16 i
Pay off is conditional to supply and Demand

supply Quantity available at the beginning of each

time period
If Q D Surplus
Q L D Shortage

Net Profit Selling price dining the period

Cost of having a unit available at the

beginning of each period

cost of surplus unit Cost of

having a unit available
at the beginning of each
period
lost of getting rid of unsold
units
Selling price at the end of a

period

Cost of shortagelimit Lost opportunity

Unrealized net profit
expected cost of losing a

customer
 Surplus Demand
Units sold
shortage Quantity available

Units in surplus Unsold units

Quantity available Demand

Units in Shortage Demand Quantity available

Total NetProfit lostottgairpius

conditional Pag o
sort
Total
9oz TotalNetProfit Cost ofShortage
age
Notation
C cost of making a unit available at the beginning
of period
a

P selling priceduring the period

i lost of getting rid of unsold units
e
Selling price at the end of the period
I expected cost of losing a customer
Q Quantity available at the beginning of a period
Demand receivedduring a period
to Propability of Demand

2 taking cost of shortage in consideration

0 otherwise
Supply Quantity Q

Demand D

Q D
Surplus
Q L D
Shortage
surplus
Pay off
shortage
Pay off Total Net Profit lost Q fD

Cost of Cost of production

surplus g
Cost of getting rid of unsold
t
selling price at theend of period

selingfedndoft
Cost icostofgettingridofunsoldunits
Cost of shortage

lost 0 3
Net profit z
Price s

Q 6100
D 120

it
Nghtraffed Yo If IbstopportunitD
Unrealized net profit
Pay off 200 40 1600
Actually cash in hand
y
200

Renate

Q
 se
CPO SOD 35 Q D
Ext CPO
Casey 0 50 Q 60 D Q
QLD

Q Q
10 12 14 16 PCD 10 12 14 16

10 500 430 360 290 0.1 so 43 36 29

the
12 380 600 530 460 0.3 114 180 159 138

14 260 480 too 630 0.2 52 96 140 126

16 140 360 580 800 0.4 56 144 232 320

1 0 272 463 5676130

Conditional Pay off Expected Conditional

pay off
T that provides the maximum EPO of 613
gglufIfy.Q
 10 12 14 16

10 D
Q
case I
12

14
QLD
16 case 2
EXE CPO

Given the following Conditional Pay off Tables

Construct the conditional Pay off formulae

Q Q
10 12 14 16 PCD 10 12 14 16

10 500 430 360 290 0.1 so 43 36 29

12438 00 530 460 0.3 114 180 159 138

14 260 480 too 630 0.2 52 96 140 126

16 140 360 580 800 0.4 56 144 232 320

To 272 463 5676130

1_
se CPO G DD Uti e La D

se cPO LRdQ HELP c e LD Q

eP0 D Q D
sej
ePO 7aLQ LD Q
g
A Net Profit knit Anycellondiagonal eso
Cor D Vallee Foo630
ca
b Surplus unit any cell on diagonala cell to the right ts
of the associated Q duet Goo 360

fun it Fanycellondiagonaldacellbelowy a
C Shortage 60
the associated D values

se CPO SOD 35 Q D

CPO SO Q GOLD Q
f
EX3 Cpd
what is the value of Q that provides the maximum

Expected Conditional Pay

Q Q
10 12 14 16 PCD 10 12 14 16

10 50 43 29

12 600 530

14 480700
16 S6 320

272463567
Practice to find the answer
Do not submit
Congratulations
finished the
you
course

1
Tm O Ee
i.e
g

W
 shortage
C 3 lost opporunity
P 5
Net profit 2
rPh
Re Total net profit cost
lost shortage
160

Return 2 too 260 160

zte
Lost opportunity does not represent
cash flow

penalty

Post's.fi
Avoided loss IPe anhHs

A Penalty
B
C Bonus