American Aerospace produces military jet engines. Frequent shortages of one critical part has been causing delays in the production of the most popular jet engine, so a new inventory policy needs to be developed for this part. There is a long lead time between when an order is placed for the part and when the order quantity is received. The demand for the part during this lead time is uncertain, but some data are available for estimating its probability distribution. In the future, the inventory level of the part will be kept under continuous review. Decisions now need to be made regarding the inventory level at which a new order should be placed and what the order quantity should be.
Answer to relevant QuestionsRead the referenced article that fully describes the OR study summarized in the application vignette presented in Sec. 18.7. Briefly describe how inventory theory was applied in this study. Then list the various financial ...For the basic EOQ model, use the square root formula to determine how Q* would change for each of the following changes in the costs or the demand rate. (Unless otherwise noted, consider each change by itself.) (a) The setup ...Consider Example 1 (manufacturing speakers for TV sets) introduced in Sec. 18.1 and used in Sec. 18.3 to illustrate the EOQ models. Use the EOQ model with planned shortages to solve this example when the unit shortage cost ...Reconsider Prob. 19.2-2. (a) Formulate a linear programming model for finding an optimal policy. A student is concerned about her car and does not like dents. When she drives to school, she has a choice of parking it on the street in one space, parking it on the street and taking up two spaces, or parking in the lot. If ...
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