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A B C D E F G H
Purchase Cost $1.50
Selling Price $2.50
Refund for Unsold $0.50
Profit Table Expected
15 16 17 18 Profit
15 $15 $15 $15 $15 $15.00
Alternative 16 $14 $16 $16 $16 $15.20
(Copies Ordered) 17 $13 $15 $17 $17 $15.00
18 $12 $14 $16 $18 $14.20
Prior Probability 0.4 0.2 0.3 0.1
State of Nature (Purchase Requests)
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A B C D E F G H
Purchase Cost $1.50
Selling Price $2.50 Cost of underordering $1.00
Refund for Unsold $0.50 Cost of overordering $1.00
Cost of Overordering + Cost of Underordering
Expected
15 16 17 18 Cost
15 $0 $1 $2 $3 $1.10
Alternative 16 $1 $0 $1 $2 $0.90
(Copies Ordered) 17 $2 $1 $0 $1 $1.10
18 $3 $2 $1 $0 $1.90
Prior Probability 0.4 0.2 0.3 0.1
State of Nature (Purchase Requests)
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A B C D E F G H I J
Preparation Cost $1.00
Selling Price $3.00 Cost of underordering $2.00
Refund for Unsold $0.50 Cost of overordering $0.50
Cost of Overordering + Cost of Underordering
Expected
0 1 2 3 4 5 Cost
0$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $5.10
Alternative 1 $0.50 $0.00 $2.00 $4.00 $6.00 $8.00 $3.35
(Copies Ordered) 2 $1.00 $0.50 $0.00 $2.00 $4.00 $6.00 $1.98
3$1.50 $1.00 $0.50 $0.00 $2.00 $4.00 $1.10
4$2.00 $1.50 $1.00 $0.50 $0.00 $2.00 $0.98
5$2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $1.23
Prior Probability 0.1 0.15 0.2 0.3 0.15 0.1
State of Nature (Purchase Requests)
Cost of underordering $49
Cost of overordering $3
Cost of Overordering + Cost of Underordering
Expected
10 11 12 13 14 15 16 17 Cost
10 $0 $49 $98 $147 $196 $245 $294 $343 $166.60
11 $3 $0 $49 $98 $147 $196 $245 $294 $120.20
Alternative 12 $6 $3 $0 $49 $98 $147 $196 $245 $79.00
($100 Traveler’s 13 $9 $6 $3 $0 $49 $98 $147 $196 $45.60
Checks Ordered) 14 $12 $9 $6 $3 $0 $49 $98 $147 $25.20
15 $15 $12 $9 $6 $3 $0 $49 $98 $15.20
16 $18 $15 $12 $9 $6 $3 $0 $49 $10.40
17 $21 $18 $15 $12 $9 $6 $3 $0 $10.80
Prior Probability 0.05 0.1 0.15 0.25 0.2 0.1 0.1 0.05
State of Nature ($100 Traveler’s Checks Needed)
19.9
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 8000 (average demand/unit time) Q = 12,837 a C13
K = $3,000 (setup cost) R = 2,300 b C14
h = $0.30 (unit holding cost) D C4
p = $10 (unit shortage cost) Distribution C12
L = 0.75 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Uniform OrderQuantity G4
a = 200 (lower endpoint) p C7
b = 3,000 (upper endpoint) ReorderPoint G5
StandardDeviation C14
Page 5
19.10
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 900 (average demand/unit time) Q = 60 a C13
K = $1,500 (setup cost) R = 60 b C14
h = $3,000 (unit holding cost) D C4
p = $1,000 (unit shortage cost) Distribution C12
L = 0.75 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Normal OrderQuantity G4
mean = 50 pC7
stand. dev. = 15 ReorderPoint G5
StandardDeviation C14
Page 6
19.11
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 40 (average demand/unit time) Q = 60 a C13
K = $40 (setup cost) R = 13 b C14
h = $8 (unit holding cost) D C4
p = $1 (unit shortage cost) Distribution C12
L = 0.8 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Uniform OrderQuantity G4
a = 5 (lower endpoint) p C7
b = 15 (upper endpoint) ReorderPoint G5
StandardDeviation C14
Page 7
19.15 (1)
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 26,000 (average demand/unit time) Q = 2,183 a C13
K = $25 (setup cost) R = 145 b C14
h = $0.30 (unit holding cost) D C4
p = $3 (unit shortage cost) Distribution C12
L = 0.95 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Uniform OrderQuantity G4
a = 50 (lower endpoint) p C7
b = 150 (upper endpoint) ReorderPoint G5
StandardDeviation C14
Page 8
19.15 (2)
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 26,000 (average demand/unit time) Q = 6,175 a C13
K = $200 (setup cost) R = 829 b C14
h = $0.30 (unit holding cost) D C4
p = $3 (unit shortage cost) Distribution C12
L = 0.95 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Normal OrderQuantity G4
mean = 500 pC7
stand. dev. = 200 ReorderPoint G5
StandardDeviation C14
Page 9
19.16 (1)
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 26,000 (average demand/unit time) Q = 1,093 a C13
K = $130 (setup cost) R = 366 b C14
h = $6 (unit holding cost) D C4
p = $100 (unit shortage cost) Distribution C12
L = 0.99 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Normal OrderQuantity G4
mean = 250 pC7
stand. dev. = 50 ReorderPoint G5
StandardDeviation C14
Page 10
19.16 (2)
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A B C D E F G H I J
Template for the Stable Products Model
Data Results Range Name Cell
D = 26,000 (average demand/unit time) Q = 678 a C13
K = $50 (setup cost) R = 995 b C14
h = $6 (unit holding cost) D C4
p = $100 (unit shortage cost) Distribution C12
L = 0.99 (service level) h C6
KC5
LC8
Demand During Lead Time Mean C13
Distribution Uniform OrderQuantity G4
a = 500 (lower endpoint) p C7
b = 1,000 (upper endpoint) ReorderPoint G5
StandardDeviation C14
Page 11