2. Models of inventory systems frequently consider the relationships among opening stock, production quantity, demand or sales, and closing stock. For a given production period j, let Sj – 1 = closing stock from the previous period Xj = production quantity in period Dj = demand in period j Sj = closing stock for period j

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.12P

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Question

2. Models of inventory systems frequently consider the relationships among opening
stock, production quantity, demand or sales, and closing stock. For a given
production period j, let Sj – 1 = closing stock from the previous period
Xj = production quantity in period
Dj = demand in period j
Sj = closing stock for period j
Required
a) Write the mathematical relationship or model that describes how these four
variables are related.
b) What constraint should be added to produce capacity for period j is given by
cj?

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