Question: Please completely solve this problem and explain steps. Question 3 ( inspired by H&L 7 . 6 - 4 ) . Consider the following problem
Please completely solve this problem and explain steps.
Question inspired by H&L
Consider the following problem
where represents the level of activity and represents the level of activity The values
of and have not been determined yet. Only activity needs to be undertaken soon
whereas activity will be initiated somewhat later. There are different scenarios that could
unfold between now and the time activity is undertaken that would lead to different values
for Therefore, the goal is to use all of this information to choose a value for
now and to simultaneously determine a plan for choosing a value of later after seeing which
scenario has occurred.
Three scenarios are considered plausible possibilities. They are listed below, along with the
values of and that would result from each one:
Scenario : and
Scenario : and
Scenario : and
These three scenarios are considered equally likely.
a Use stochastic programming with recourse to formulate the appropriate model for this
problem.
b Solve the model by using AMPL do not forget to submit your AMPL code What is
the optimal plan?
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