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Quantitative Methods Final Exam Practice

The document discusses several topics related to inventory management and linear programming. It includes: 1) An explanation of economic order quantity and how to calculate it using holding costs and ordering costs. 2) An example of a linear programming problem to minimize food costs given calorie, protein, carbohydrate and fat constraints. 3) A calculation of reorder point and inventory on hand for an order of 300 units with demand of 25 units/day and lead time of 20 days. 4) A two step approach to determine optimal inventory level given mean daily sales, standard deviation, marginal profit, and marginal loss. The optimal level is calculated to be 3165 units.

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Husaynov Hikmat
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255 views5 pages

Quantitative Methods Final Exam Practice

The document discusses several topics related to inventory management and linear programming. It includes: 1) An explanation of economic order quantity and how to calculate it using holding costs and ordering costs. 2) An example of a linear programming problem to minimize food costs given calorie, protein, carbohydrate and fat constraints. 3) A calculation of reorder point and inventory on hand for an order of 300 units with demand of 25 units/day and lead time of 20 days. 4) A two step approach to determine optimal inventory level given mean daily sales, standard deviation, marginal profit, and marginal loss. The optimal level is calculated to be 3165 units.

Uploaded by

Husaynov Hikmat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Practical part 1. https://accounting-simplified.com/management/inventory/economic-order-quantity/.

Practical part 2
https://www.algebra.com/algebra/homework/coordinate/word/Linear_Equations_And_Systems_Word
_Problems.faq.question.1127117.html.

Practical part 3.

Practical part 6 https://www.accountingformanagement.org/economic-order-quantity/#:~:text=unit


%20of%20inventory-,Example,this%20material%20is%20given%20below%3A&text=Holding%20cost%3A
%20%240.30%20per%20unit.

Practical part 7 https://www.accountingformanagement.org/economic-order-quantity/.

Practical part 8 https://www.analyticsvidhya.com/blog/2017/02/lintroductory-guide-on-linear-


programming-explained-in-simple-english/.
Practical part 9 Here, the decision variables are the food items. Because the food items
contain the Calories, Carbohydrates, Fats and Protein. Based the quantity of the food items the
cost is decided.
Let,

Food Item 1 = x1

Food Item 2 = x2

Food Item 3 = x3

Food Item 4 = x4

Objective Function
The objective function to be minimized is as follows, Z = 0.5 x1 + 0.2 x2 + 0.3 x3 + 0.8 x4

The value in front of each decision variable is the cost associated with each food item.

Constraints
The given constraints are that the

i)Total calories should be greater than or equal to 500

400 x1 + 200 x2 + 150 x3 + 500 x4 >= 500

ii) Should contain at least 6 grams of protein

3 x1 + 2 x2 + 0 x3 + 0 x4 >= 6

iii) Should contain at least 10 grams of carbohydrates

2 x1 + 2 x2 + 4 x3 + 4 x4 >= 10

iv) Should contain at least 8 grams of fat

2 x1 + 4 x2 + x3 + 5 x4 >= 8

All the values must be present


x1, x2, x3, x4 >= 0
variables
x1 0
x2 3
x3 1
x4 0

objective constraints
minimize 0.9 inequality RHS
1 750 >= 500
2 6 >= 6
3 10 >= 10
4 13 >= 8
5 0 >= 0
6 3 >= 0
7 1 >= 0

practical part 11.


Practical part 15. Inventory of order = 300 unit. Demand = 25 units/day. Lead time = 20
day.
Reorder point= ROP= demand*Lead-time= 500 units. Inventory on hand= ROP-
inventory of order= 500-300= 200.

Practical part 12.

Practical part 14. Step 1. Using the information provided, since 70%
of the time the sales are between 2,900 and 3,100, it can be expressed as P( 2900
<X<3100) = 0.70. Assuming daily sales are normally distributed, and the mean is
given as 3,000 reports, we have
0.7= P(X<3100) – P(X ≤2900) = P ( Z< (3100-3000)/σ) –P( Z≤ (2900-3000)/ σ)=
2P( Z<100/σ)-1= 0.85 = P( Z< 100/σ) . Using standard normal distribution table,
we have P( Z< 1.0364) = 0.85. Thus, 100/ σ= 1.0364 σ= 96.4878.
Step 2. Using marginal analysis, let  denote the probability that demand will be
greater than or equal to the supply, and the optimal decision rule is to stock the additional
unit if P(MP) ≥ (1-P)ML. where MP is the additional profit achieved if one additional unit is
stocked and sold, and ML is the loss that occurs when one additional unit is stocked but
cannot be sold. In this case, clearly the marginal profit is MP= $350-$15= $315. And the
marginal loss is ML=15. Then the critical value is given by ML/(ML+MP) = $15/($15+$315)=
0.0429. So the inventory stocking decision rule is to stock an additional unit if P ≥ 0429.
Using normal distribution table, we have P(Z≤1.718) = 1-0.0429 thus the corresponding z-
value is z= 1.718. In this problem, the mean and standard deviation of sales are µ=3000
and σ= 96.4878 Therefore, we have 1.718= X.- 3000

96.4878 X.= 3165.77


The company should stock 3165 reports since the probability of selling 3166 is slightly less
than 0.0429.

Practical part 16.


https://scholar.cu.edu.eg/?q=hisham/files/dss-s17-03.pdf

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