Reference no: EM131619381

Question: In investigate the effect of the order quantity on long-run mean daily cost. Each order arrives on a pallet on a delivery truck, so the permissible order quantities, Q, are multiples of 10 (i.e., Q may equal 10, or 20, or 30, ... ). In the policy Q = 20 was investigated.

(a) First, investigate the two policies Q = 10 and Q = 50. Use the run lengths, and so on, suggested. On the basis of these runs, decide whether the optimal Q, say Q*, is between I 0 and 50 or is greater than 50. (The cost curve as a function of Q should have what kind of shape?)

(b) Using the results in part (a), suggest two additional values for Q and simulate the two policies. Draw conclusions. Include an analysis of the strength of your conclusions.