Question: Problem #4 Consider the following cost components: p is the shortage cost per unit of unsatisfied demand, c is the unit cost for purchasing each

Problem #4 Consider the following cost

Problem #4 Consider the following cost components: p is the shortage cost per unit of unsatisfied demand, c is the unit cost for purchasing each unit, h is the holding cost per unit remaining at end of period. Demand X and order quantity Q are continuous variables. Demand X has the PDF, f(x). . a. Considering three cost components (i.e., shortage cost, unit cost, and holding cost), design the cost function of order quantity Q. b. Assuming that the cost function designed in (a) is the convex function of Q, Derive the CDF function such that the demand is less than or equal to order quantity Q (i.e., P(X SQ)). Problem #4 Consider the following cost components: p is the shortage cost per unit of unsatisfied demand, c is the unit cost for purchasing each unit, h is the holding cost per unit remaining at end of period. Demand X and order quantity Q are continuous variables. Demand X has the PDF, f(x). . a. Considering three cost components (i.e., shortage cost, unit cost, and holding cost), design the cost function of order quantity Q. b. Assuming that the cost function designed in (a) is the convex function of Q, Derive the CDF function such that the demand is less than or equal to order quantity Q (i.e., P(X SQ))

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