Final Cheat Sheet - Summary Operations Management PDF

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Final Cheat Sheet ...

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Sha i s t aDh a n e s a r Newsvendor Model  Goal: make stocking decision, Q, in advance of knowing demand; max expected profit/ min cost o Expected profit = price*expected sales – cost * stocking level  Overage cost: the per-unit cost of having too much inventory; Co = c – s (cost of acquisition – salvage value)  Underage cost: the per-unit cost of having too little inventory; the margin on sold items; Cu = p – c  Objective: min expected opportunity + disposal cost = E[Cu x max(D-Q,0) + Co x max(Q-D),0] o Add extra unit: sell if D > Q  decrease stockout cost by Cu o Don’t add extra unit: stuck with extra unit if D...