The Wilson lot size formula in economics says that the most economical quantity Q of goods (radios, shoes, brooms, whatever) for a store to order is given by the formula Q = sqrt(2KM/h), where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding cost for each item (cost of space, utilities, security, and so on). To which of the variables K, M, and h is Q most sensitive near the point (K0 , M0 , h0) = (2, 20, 0.05)? Give reasons for your answer.
The Wilson lot size formula in economics says that the most economical quantity Q of goods (radios, shoes, brooms, whatever) for a store to order is given by the formula Q = sqrt(2KM/h), where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding cost for each item (cost of space, utilities, security, and so on). To which of the variables K, M, and h is Q most sensitive near the point (K0 , M0 , h0) = (2, 20, 0.05)? Give reasons for your answer.
Algebra: Structure And Method, Book 1
(REV)00th Edition
ISBN:9780395977224
Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Publisher:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Chapter11: Rational And Irrational Numbers
Section11.6: The Pythagorean Theorem
Problem 11P
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The Wilson lot size formula in economics says that the most economical quantity Q of goods (radios, shoes, brooms, whatever) for a store to order is given by the formula Q = sqrt(2KM/h), where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding cost for each item (cost of space, utilities, security, and so on). To which of the variables K, M, and h is Q most sensitive near the point (K0 , M0 , h0) = (2, 20, 0.05)? Give reasons for your answer.
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