An office supply company is trying to determine the order quantity for Mt. White fountain pensthat are sold to local executives. Annual demand is 5,000 units, and each pen costs the store$50. It costs $75 to place an order, and the inventory carrying cost rate is 30% of item's value.Formulate ONLY the objective function for this problem. Let Q indicate the order quantity.Objectivefunction:

Given data is Annual demand (D) = 5000 units Unit cost = $50 Order cost (S)= $75 Holding cost (H) =…

Answered: An office supply company is trying to…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter3: Introduction To Optimization Modeling

Section3.8: A Multiperiod Production Model

Problem 22P

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In Problem 12 of the previous section, suppose that the demand for cars is normally distributed with mean 100 and standard deviation 15. Use @RISK to determine the best order quantityin this case, the one with the largest mean profit. Using the statistics and/or graphs from @RISK, discuss whether this order quantity would be considered best by the car dealer. (The point is that a decision maker can use more than just mean profit in making a decision.)
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