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Solutions To Sample Problems From Chapter 5

5.3

a) X

= 32

 

s

= 9.55

 

b) Interval

 

#Obs.

Frequency

 

<20

4

.111

 

20-27

 

8

.222

28-33

9

.250

34-37

4

.111

38-43

6

.167

 

>43

5

.139

Total

36

1.000

Let X = number of gallons used in one week. Then

 

0.869

P{X 19} = P(Z<(19 – 32)/9.55) = P(Z < -1.36) =

Other probabilities are computed in a similar fashion giving:

Interval

Probability

Observed Frequency

 

X = 19

.0869

.1111

19

< X = 27

.2146

.2222

27

< X = 33

.2383

.2500

33

< X = 37

.1587

.1111

37

< X = 43 43 < X

.1764

.1670

.1251

.1380

Total

1.0000

1.0000

Clearly there is a very close agreement between the probabilities and the observed frequencies. (A formal χ 2 goodness of fit test gives χ 2 = .859 from which one concludes that the normal provides a very good fit.

c) Let Y = X 1 + X 2 +

+ X 6

Then E(Y) = (6)(32) = 192

σ Y

=

X 1 + X 2 + + X 6 Then E(Y) = (6)(32) = 192 σ

(6)(9.457) 2 = 23.385

P{Y 200} = P

Z 200 192

= P{Z .342} = .6331

23.385

5.7

If he only keeps track of the number of sales, he has no way to accurately estimate the demand since demand = sales + lost sales. He would need some way to gauge the lost sales. One method would be to increase his supply for a period of time so that he would be able to meet all demand.

5.8 a) c 0 c

u

= .08 - .03 = .05 = .35 - .08 = .27

Critical ratio =

.27

.05 + .27

= .84375

From the given distribution, we have:

Q

f(Q)

F(Q)

0

.05

.05

5

.10

.15

10

.10

.25

15

.20

.45

20

.25

.70

 

< - - - - .84375

25

.15

.85

30

.10

.95

35

.05

1.00

Since the critical ratio falls between 20 and 25 the optimal is Q = 25 bagels.

b) The answers should be close since the given distribution appears to be close to the normal.

c) µ

= xf(x) = (0)(.05) + (5)(.10) +

+(35)(.05) = 18

σ 2 = x 2 f(x) - µ 2 = 402.5 - (18) 2 = 78.5

σ =

(2)(32)(1032) .36
(2)(32)(1032)
.36

=

8.86

The z value corresponding to a critical ratio of .84375 is 1.01. Hence,

Q* =

σz

+

µ = (8.86)(1.01) + 18 = 26.95 ~ 27.

5.11

a) X

s 2

= 34.0 = 204.4 (s = 14.3)

b) c u = 60 - 40 = 20 c 0 = 40 - 29 = 11

Critical ratio =

20

20 + 11

= .6452

c)

z = .37,

Q* =

σz

+ µ = (14.3)(.37)

+ 34 = 39.3

39

 

#Times

Relative

Cum

Value

Observed

Freq.

Freq.

10

1

.1

.1

20

1

.1

.2

30

4

.4

.6

< - - - critical ratio = .6452

40

2

.2

.8

50

1

.1

.9

60

1

.1

1.0

Q * 33 by linear interpolation.

d) The normal approximation is not very accurate since the order quantity it recommends is almost 20% too large.

5.13

a)

h

= (1.50)(.28) = .42

K

= 100

p

= 12.80

λ = (280)(12) = 3360

µ = (280)(5) = 1400

σ = 77 5 = 172.18 2Kλ (2)(100)(3360) EOQ = Q 0 = + =
σ = 77 5 = 172.18
2Kλ
(2)(100)(3360)
EOQ = Q 0 =
+
= 1265
h .42
1 - F(R 1 )
=
Qh
(1265)(.42)
= .0124
pλ =
(12.80)(3360)
z 1 = 2.24,
L(z 1 ) = .0044,
n(R 1 ) = .75
2λ Q = [K + pn(R)] = 1 h
Q
=
[K + pn(R)] =
1
h
(2)(3360) .42
(2)(3360)
.42

[100 + 12.80(.75)] = 1324

1 - F(R 2 ) = Qh

pλ = (1324)(.42)

12.80(3360)

=

.0129

z 2 = 2.23

L(z 2 ) = .004486

n(R 2 ) = .77

Q 2

=

[100 + 12.80(.77) ] = 1326 100 + 12.80(.77)] = 1326

Close enough to stop.

z = 2.23, R = σz + µ = (172.18)(2.23) + 1400

=1784

Optimal (Q,R) = (1326,1784)

b)

G(Q,R)

=

Kλ

Q

+ h

Q

2

+ pλn(R)

+ R µ

Q

Kλ

= (100)(3360)

Q

1326

h

Q

2

+ R µ

= $253.39

= $439.74

pλn(R)

Q

= (12.80)(3360)(.77)

1326

= $24.97

c) σ = 0 EOQ solution

cost =

2Kλh = (2)(100)(3360)(.42)
2Kλh =
(2)(100)(3360)(.42)

= $531.26

G(Q,R) = $718.10

cost of uncertainty = $718.10 - 531.26 = $186.84 yearly.

5.16 Type 1 service of 95%

Q = EOQ = 1265

F(R) = .95,

R µ

= 1.645, which gives R = 1683.

σ

5.23

a)

From the solution of problem 14 (Q,R) = (81,124) Set s = R = 124

S =

b) x

1

R

+

Q

= 205

= 26 < 124 order to 205 in January.

(order quantity

=

205

-

26

=

179)

x

x

x

x

x

2

3

4

5

6

(x 7

= 205

-

37

= 168.

 

do not order in February.

=

168

-

33

= 135.

do not order in March.

=

135

-

26

=

109

< 124.

order to 205 in April.

 

(order quantity

=

205 - 109

= 96)

= 205

-

31

= 174.

 

do not order in May.

=

174

- 14

= 160.

do not order in June.

=

160

- 40

=

120

order 85 units in July.)

5.25

a)

Cum

Fraction

 
 

Annual

 

Annual

of

 

Item

Volume

Profit

Profit

 

Profit

Total

 

Costume Jewelry

1900

$15.00

28500.00

28500.00

0.41

 

Novelty Gifts

2050

$12.25

25112.50

53612.50

0.76

A

Earrings

 

1285

$3.50

4497.50

58110.00

0.83

 

Children's Clothes

575

$6.85

3938.75

62048.75

0.88

 

Men's Jewelry

875

$4.50

3937.50

65986.25

0.94

B

Tee Shirts

 

1550

$1.25

1937.50

67923.75

0.97

 

Greeting Cards

3870

$0.40

1548.00

69471.75

0.99

 

Chocolate Cookies

7000

$0.10

700.00

70171.75

1.00

C

b) The cookies attract customers to the store. (In retail parlance, it would be known

as a loss leader.)