Question: Please help me solve this problem. Consider an inventory problem described by the following data: k, : cost per item stocked, K2 : revenue per
Please help me solve this problem.


Consider an inventory problem described by the following data: k, : cost per item stocked, K2 : revenue per item sold, ky : scrap value per item stocked and not sold. Defining q: amount stocked. d: demand; assume thatv. (q, d) = -k,q+ k, min {q, d} + k, max {q -d,0}. Show first that a. max {q -d,0} = q - min {q, d}, and the substituting (a) into the expression for v. (q, d), b. v. (q, d) = (-k, + k, )q+ (k2 -k,) min{q,d'}. Show further that c. v. (q) = Ev, (q, d) = (-k, + k, )q+(k, -k,)[E(q) + qP(d > q)], d. v, (q + 1) -v,(q) = Ev, (q, d) = (-k, + k;)+ (k2 -k;) P(d > q+1), e. v. (q + 1) > v. (q) P(d > q +1) >; ki - ky k, - k3
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
