Operations Research208010 marksNumerical: EMV EOL EPPI decisionExpected Monetary Value
Milk Salesman Decision Problem A milk salesman estimates the probability of the demand for a litre of milk as follows: He purchases a litre of milk @ Rs. 60 and sells it @ Rs. 70. Assuming that the unsold milk has no scrap value, find: (a) Find optimum quantity that would obtain Max. EMV. (b) Find t
Milk Salesman Decision Problem
A milk salesman estimates the probability of the demand for a litre of milk as follows: He purchases a litre of milk @ Rs. 60 and sells it @ Rs. 70. Assuming that the unsold milk has no scrap value, find:
(a) Find optimum quantity that would obtain Max. EMV. (b) Find the minimum value of EOL. (c) What is the value of expected profit with perfect information (EPPI)?
| Demand | 11 | 12 | 13 | 14 | 15 |
|---|---|---|---|---|---|
| Probability | 0.10 | 0.15 | 0.30 | 0.25 | 0.20 |
[10]
- Purchase cost = Rs. 60 per litre - Selling price = Rs. 70 per litre - Profit per litre sold = $70 - 60 = $ Rs. 10 - Loss per litre unsold (no scrap) = Rs. 60 - Demand distribution: Demand 11 12 13 14 15 -------------------------------------- Prob 0.10 0.15 0.30 0.25 0.20 - If demand $\ge$ stock...