Sensitivity of model solution to chances in parameter values

Assignment Help Operation Management

Reference no: EM131766987

AV City assumed with certainty that the ordering cost is $625/order and the inventory carrying cost is $130/unit/year. However, the inventory model parameters frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters as follows: (A) both ordering costs and carrying cost are 10% less than originally estimated; (B) both ordering cost and carrying cost are 10% higher than originally estimated; (C) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated; and (D) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to chances in parameter values.

Reference no: EM131766987

Questions Cloud

Determining how well the thermostat works : Cold cabin? During the winter months, the temperatures at the Colorado cabin owned by the Starnes family can stay well below freezing (32°F or 0°C).

Describe example of bottle neck effect and founder effect : Genetic Drift and the Founder Effect- There are two types of genetic drift. Describe and give an example of both the bottle neck effect and the founder effect.

Combination of high crude oil prices : A combination of high crude oil prices and government subsidies for ethanol have led to a sharp increase in the demand for corn in recent years.

Estimate the variation in distance flown by the athletes : Ski jump When ski jumpers take off, the distance they fly varies considerably depending on their speed, skill, and wind conditions.

Sensitivity of model solution to chances in parameter values : Prepare a table with values from all four cases and compare the sensitivity of the model solution to chances in parameter values.

Create a diverse portfolio : Suppose you have $10,000 in funds that you wish to invest in the stock market. What type(blue chip, etc) of stocks would you purchase

Force to design new benefits program for your company : You have been assigned to a task force to design a new benefits program for your company.

Discuss similarities between domains bacteria and archaea : Discussion: Similarities and Differences- Discuss the similarities and differences between organisms in the domains Bacteria and Archaea.

Are direct shipments good practice to save lead-time : How has outsourcing impacted inventory management at OEM manufacturers? Are direct shipments a good practice to save lead-time?

User Account

All Pages