# Question: Reconsider Prob 18 3 3 Because of the popularity of the Power

Reconsider Prob. 18.3-3. Because of the popularity of the Power model computer, Tim Madsen has found that customers are willing to purchase a computer even when none are currently in stock as long as they can be assured that their order will be filled in a reasonable period of time. Therefore, Tim has decided to switch from the basic EOQ model to the EOQ model with planned shortages, using a shortage cost of $200 per computer short per year.

(a) Use the Solver version of the Excel template for the EOQ model with planned shortages (with constraints added in the Solver dialog box that C10:C11 = integer) to find the new optimal inventory policy and its total variable inventory cost per year (TVC). What is the reduction in the value of TVC found for Prob. 18.3-3 (and given in the back of the book) when planned shortages were not allowed?

(b) Use this same spreadsheet to generate a table that shows how TVC and its components would change if the maximum shortage were kept the same as found in part (a) but the order quantity were changed to the following values: 15, 17, 19, . . . , 35.

(c) Use this same spreadsheet to generate a table that shows how TVC and its components would change if the order quantity were kept the same as found in part (a) but the maximum shortage were changed to the following values: 10, 12, 14, . . . , 30.

(a) Use the Solver version of the Excel template for the EOQ model with planned shortages (with constraints added in the Solver dialog box that C10:C11 = integer) to find the new optimal inventory policy and its total variable inventory cost per year (TVC). What is the reduction in the value of TVC found for Prob. 18.3-3 (and given in the back of the book) when planned shortages were not allowed?

(b) Use this same spreadsheet to generate a table that shows how TVC and its components would change if the maximum shortage were kept the same as found in part (a) but the order quantity were changed to the following values: 15, 17, 19, . . . , 35.

(c) Use this same spreadsheet to generate a table that shows how TVC and its components would change if the order quantity were kept the same as found in part (a) but the maximum shortage were changed to the following values: 10, 12, 14, . . . , 30.

**View Solution:**## Answer to relevant Questions

Every Saturday night a man plays poker at his home with the same group of friends. If he provides refreshments for the group (at an expected cost of $14) on any given Saturday night, the group will begin the following ...Reconsider Prob. 19.2-2. (a) Formulate a linear programming model for finding an optimal policy. Reconsider Prob. 19.2-8. (a) Formulate a linear programming model for finding an optimal policy. Consider the discrete random variable X that is uniformly distributed (equal probabilities) on the set {1, 2, . . . , 9}. You wish to generate a series of random observations xi (i = 1, 2, . . .) of X. The following three ...Obtaining uniform random numbers as instructed at the beginning of the Problems section, generate three random observations from each of the following probability distributions. (a) The random variable X has P{X = 0} = 1/2. ...Post your question