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Matching Supply with Demand: An Introduction to Operations Management 2nd Edition by Cachon Terwiesch
Edition 2ISBN: 978-0697811059Matching Supply with Demand: An Introduction to Operations Management 2nd Edition by Cachon Terwiesch
Edition 2ISBN: 978-0697811059 Exercise 1
(O'Neill) Consider the case in the relationship between O'Neill and TEC with unlimited, but expensive, reactive capacity, that is, TEC allows O'Neill to submit a second order but charges O'Neill a premium for those units. (See Figure 12.1.) Instead of a 20 percent premium, suppose TEC were to charge O'Neill only a 10 percent premium for units in the second order.
a. What is O'Neill's optimal first order quantity of Hammer 3/2s?
b. What is O'Neill's maximum expected profit with the Hammer 3/2?
c. How many units should TEC expect O'Neill will order in the second order?
d. What fraction of the mismatch cost is eliminated by this reactive capacity opportunity?
a. What is O'Neill's optimal first order quantity of Hammer 3/2s?
b. What is O'Neill's maximum expected profit with the Hammer 3/2?
c. How many units should TEC expect O'Neill will order in the second order?
d. What fraction of the mismatch cost is eliminated by this reactive capacity opportunity?
Explanation
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In a single-period inventory model, the ...
Matching Supply with Demand: An Introduction to Operations Management 2nd Edition by Cachon Terwiesch
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