Demand during lead time follows normal distribution.
𝐺(𝑅)=𝑏/(ℎ+𝑏)→0.9≤𝑏/(5+𝑏 )→𝑏≥$45
θ
a. EOQ
b. Poisson distribution --> discre
r
0
1
2
3
4
5
6
Demand during lead time follows Poisson distribution. 7
8
D= 24 units/year --> expected demand per year E(D) 9
c= $ 125 /units 10
h= $ 25 /units
l= 1 month = 1/12 year Assume G(r*)
A= $ 15
b= $ 150 Using the above table, G(r*)
c. 𝐵(𝑄^∗,𝑟^∗ )=1/𝑄^∗
B(Q*,r*)
I(Q*,r*)
d. For (Q*=6, r*=3) policy:
For (Q=4, r=3) policy:
(Q,r)
F(Q)
B(Q,r)
I(Q,r)
S(Q,r)
The (Q=4, r=3) policy will low
However, the cost of achievin
2 units/year --> expected demand during lead time 𝜃=𝐸(𝐷)×𝑙
6 units 𝐸𝑂𝑄=√(2𝐴𝐷/ℎ)
Poisson distribution --> discrete distribution --> Poisson table
p(r) G(r) B(r)
0.135 0.135 2.000
0.271 0.406 1.135 p(r) = [Link](r, θ, false)
0.271 0.677 0.541 G(r) = [Link](r, θ, true)
0.180 0.857 0.218 B(r) = θp(r)+(θ-r)[1-G(r)]
0.090 0.947 0.075
0.036 0.983 0.022
0.012 0.995 0.006
0.003 0.999 0.001
0.001 1.000 0.000
0.000 1.000 0.000
0.000 1.000 0.000
0.850
Using the above table, G(r*) = 0.857 > G(r) = 0.85 when r*=3.
𝐵(𝑄^∗,𝑟^∗ )=1/𝑄^∗ ∑24_(𝑥=𝑟^∗+1)^(𝑟^∗+𝑄^∗)▒𝐵(𝑥) =1/𝑄^∗ [𝐵(4)+𝐵(5)+𝐵(6)+𝐵(7)+𝐵(8)+𝐵(9)]
0.017549
𝐼(𝑄^∗,𝑟^∗ )=(𝑄^∗+1)/2+𝑟^∗−𝜃+𝐵(𝑄^∗,𝑟^∗ )
4.517549
𝐹(𝑄^∗ )=𝐷/𝑄^∗
For (Q*=6, r*=3) policy:
F(Q*) 4
𝑆(𝑄^∗,𝑟^∗ )=1−1/𝑄^∗ [𝐵(𝑟^∗ )
−𝐵(𝑟^∗+𝑄^∗ )]=1−1/𝑄^∗ [𝐵(3)−𝐵(9)]
B(Q*,r*) 0.017549
I(Q*,r*) 4.517549
S(Q*,r*) 0.963673
For (Q=4, r=3) policy:
F(Q) 6
𝐵(𝑄,𝑟)=1/𝑄 ∑_(𝑥=𝑟+1)^(𝑟+𝑄)▒𝐵(𝑥) =1/𝑄[𝐵(4)+𝐵(5)+𝐵(6)+𝐵(7)]
B(Q,r) 0.034981
I(Q,r) 3.534981
S(Q,r) 0.927791 𝑆(𝑄,𝑟)=1−1/𝑄 [𝐵(𝑟)−𝐵(𝑟+𝑄)]=1−1/𝑄 [𝐵(3)−𝐵(7)]
(6,3) (4,3)
4 6
0.0175 0.0350
4.5175 3.5350
0.9637 0.9278
The (Q=4, r=3) policy will lower the service level while reducing the inventory level.
However, the cost of achieving this is 2 additional replenishment orders per year.
𝐵(6)+𝐵(7)+𝐵(8)+𝐵(9)]
