10.8The local fire department uses 10,000 alkaline flashlight batteries per year, which costs$4 each. The cost of ordering batteries is estimated to be $50. The current interest ratesuggested by the city council is 25%. The sales rep has recently suggested that you could get adiscount of 2% for orders of 2000 batteries at a time. Should you take advantage of this specialoffer?

Given information:Annual demand (D) = 10,000 batteriesPrice (P) = $4 per batteryCost of ordering (O)…

Answered: 10.8 The local fire department uses…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 14P

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AAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3.a. Which alternative should be chosen based on the maximax criterion?b. Which alternative should be chosen based on the maximin criterion?c. Which alternative should be chosen based on the Lapalce criterion?d. Which alternative should be chosen based on criterion of realism with alpha = 0.7?e. Which alternative should be chosen based on the minimax regret criterion?f. Which…

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