Which of the following is NOT true about the newsvendormodel (Circle ALL statements that are NOT TRUE)i. If the unit cost of the item increases then the optimal quantitydecreasesii. The stockout penalty does not affect the quantity orderediii. The total cost is the unit cost multiplied by the quantity orderediv. If the salvage value increases the quantity ordered decreasesv. If the standard deviation of the demand increases, then thequantity decreases

The newsvendor model is described as a model that the used in inventory management and supply chain…

Answered: Which of the following is NOT true…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section11.2: Operations Models

Problem 3P: Referring to Example 11.1, if the average bid for each competitor stays the same, but their bids...

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In Example 11.3, suppose you want to run five simulations, where the probability of passing inspection is varied from 0.6 to 1.0 in increments of 0.1. Use the RISKSIMTABLE function appropriately to do this. Comment on the effect of this parameter on the key outputs. In particular, does the probability of passing inspection have a large effect on when production should start? (Note: When this probability is low, it might be necessary to produce more than 25 batches, the maximum built into the model. Check whether this maximum should be increased.)
Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
Which of the following is NOT a determinant of the demand for good X?
4. A publisher prints copies of a popular weekly tabloid for distribution and sale. The fixed costs are $500 per print run, with each copy printed costing an additional $0.40. If C(q) is the cost function (in $) of the price of the print run as a function of copies printed, what is the formula for C(q)? Select one: a. C(q) = 500 + 0.4q b. C(q) = 500q + 0.4 c. C(q) = (500 + 0.4)q d. C(q) = 500 - 0.4q e. C(q) = 500q - 0.4 5. A hot dog vendor sells an average of 50 hot dogs during a Little League baseball game. If the sales are Normally distributed with a standard deviation of 7 hot dogs, what is the probability the vendor will sell between 45 and 65 hot dogs? Select one: a. 74.50% b. 92.36% c. 99.78% d. 174.50% e. 2.14 f. -0.71 g. 0.71
A. How many vaccines should the Clinic order to maximize its expected profit? The Clinic should order (x) vaccines because it yields the maximum expected profit of $(x).
Assume the demand for a company’s drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year,it will cost $16x. Each unit of Wozac is soldfor $3. Each unit of Wozac produced -incurs a variable production cost of $0.20. It costs $0.40 per year to operate a unit of capacity.Determine how large a Wozac plant the company should build to maximize its-expected profit over the next 10 years.
9. You are given some additional time for Engine time that will increase the demand constraint from 2100 to 2400 for a total cost of $50,000. Would you say yes or no? 10 If the Engine decreases by 100 and Assembly and Testing increases by 50, should the solution be rerun? Explain. 11. If the Engine increases by 750 and Assembly and Testing decrease by 150, should the solution be rerun? Explain.
I own a single share of Wivco stock. I must sell myshare at the beginning of one of the next 30 days. Each day,the price of the stock changes. With probability q(x), theprice tomorrow will increase by x% over today’s stock price(x can be negative). For example, with probability q(5),tomorrow’s stock price will be 5% higher than today’s. Showhow dynamic programming can be used to determine astrategy that maximizes the expected revenue earned fromselling the share of Wivco stock. Assume that at thebeginning of the first day, the stock sells for $10 per share.
you are thinking of opening a small copy shop. It costs $5000 to rent a copier for a year, and it cost $0.03 per copy to operate the copier. Other fixed costs of running the store withh amount to $400 per month. You plan to charge $0.10 per copy, and the store will be open 365 days per year. Each copier can make up to 100,000 copies per year. a. for one to five copiers rented and daily demands of 500, 1000, 1500, 2000 copies perday, find annual profit. That is, find annual profit for each of these combinations of copiers rented and daily demand. b. if you rent three copies, what daily demand for copies will allow you to break even? c. Graph profit as a function of the number of copiers for a daily demand of 500 copiers; for a daily demand of 2000 copies. Interpret your graph
An optometrist orders eyeglass frames at a cost of $40per frame and sells each frame for $70. Annual holding costis 20% of the optometrist’s cost of purchasing a frame. Eachtime frames are ordered, a cost of $200 is incurred. Becauseof lost goodwill, a cost of $50 is incurred each time acustomer wants a frame that is not in stock. Frames aredelivered one week after an order is placed. Annual demandfor frames is N(1,040, 15.73).a Assuming all shortages are backlogged, determinethe order quantity and reorder point. b Assuming all shortages result in lost sales, deter-mine the order quantity and reorder point. c To meet 95% of all orders from stock, what shouldbe the reorder point?d To have shortages occur during an average of twolead times per year, what should be the reorder point?
A manufacturing company faces an uncertain demand for its product at an average of 10,000 units per year. Selling price of the product is IDR. 1.500.000,-. The cost of holding per unit per year is estimated at IDR 350.000,-. Profit of the product is IDR. 300,000,- per unit. If the company could not meet the demand, then the profit will be lost. Ordering lead time is approximately 7 days, and the demand during lead time follows a uniform distribution of 30 to 200 units. a.Determine order quantity and reorder points to minimise the total cost. b. Determine the review period and maximum inventory to minimise the total cost C. Calculate the total cost for item a and b based on the your iteration on the data
A salesperson in a large bicycle shop is paid a bonus ifhe sells more than 4 bicycles a day. The probability ofselling more than 4 bicycles a day is only .40. If the numberof bicycles sold is greater than 4, the distribution of sales isas shown in Table 20. The shop has four different models ofbicycles. The amount of the bonus paid out varies by type.The bonus for model A is $10; 40% of the bicycles sold areof this type. Model B accounts for 35% of the sales andpays a bonus of $15. Model C has a bonus rating of $20 andmakes up 20% of the sales. Finally, model D pays a bonusof $25 for each sale but accounts for only 5% of the sales.Develop a simulation model to calculate the bonus asalesperson can expect in a day.

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