Question: 5. In Problems 1 - 4, the decision about the number of generators to purchase was made based on estimates for the number of days
5. In Problems 1 - 4, the decision about the number of generators to purchase was made based on estimates for the number of days without electricity and the lost profits that result from the inability to open stores. Historical data and management expertise can help improve these estimates, but uncertainty still exists. In this question, we will examine the effects of this uncertainty on the procurement decisions made under the two objectives. a. Using the approach from Problem 3, calculate the value of Q that minimizes maximum regret if daily profit loss is $3,000 and electricity is out for 2, 3, or 4 days. Do the same if daily profit loss is $5,000 and electricity is out for 2, 4, or 5 days. b. How do these values compare to those from Problem 1 for each scenario, where the objective was to minimize expected cost? How do the Q values change under each objective as the number of days without electricity and the anticipated profit loss increase? c. What implications do these trends have for supply chain managers and their decisions about procuring emergency equipment in the face of uncertain scenarios?
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