As stated in Example 12.5, the critical fractile analysis is useful for finding the optimal order quantity,

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As stated in Example 12.5, the critical fractile analysis is useful for finding the optimal order quantity, but it doesn’t (at least by itself) show the probability distribution of net profit. Use @RISK, as in Chapter 10, to explore this distribution. Actually, do it twice, once with the triangular demand distribution and its optimal order quantity and once with the normal demand distribution and its optimal order quantity. What can you say about the resulting distributions of profit? What can you say about the resulting mean profits? Could you use @RISK to confirm that these order quantities are indeed optimal? Explain how.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Practical Management Science

ISBN: 978-1305250901

5th edition

Authors: Wayne L. Winston, Christian Albright

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