Problem 1 - Inventory Planning

Economic Parameters
Cost of a tree
Price of a tree sold (in season)
Price of a tree left over
Profit on each tree sold
Loss on each tree left over

Probability Distribut
$70
$100
$25
$30
$45

Demand
100
150
200
250
300
Mean
Variance
Std Deviation

Assumption 1 : Discrete Distribution

Random Variable
Demand for the current year (D)
0

Assumption 2 : Normal Distribution

Random Variable
Demand for the current year
0

Decision
Amount Ordered (D)
180
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
250
260
270
280
290
300

Trees Sold
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Trees leftover
180
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
250
260
270
280
290
300

Decision
Amount Ordered
180
100
110
120
130
140
150
160

Trees Sold
0
0
0
0
0
0
0
0

Trees leftover
180
100
110
120
130
140
150
160

170
180
190
200
210
220
230
240
250
260
270
280
290
300

0
0
0
0
0
0
0
0
0
0
0
0
0
0

170
180
190
200
210
220
230
240
250
260
270
280
290
300

Probability Distribution
Frequency
0.2
0.2
0.35
0.2
0.05

Errors
7225
1225
225
4225
13225

Expected
Profit
$3,727
$3,000
$3,148
$3,296
$3,443
$3,591
$3,739
$3,735
$3,731
$3,727
$3,723
$3,719
$3,451
$3,183
$2,915
$2,647
$2,379
$1,966
$1,553
$1,139
$726
$313

Objective
Profit
($8,100)
($4,500)
($4,950)
($5,400)
($5,850)
($6,300)
($6,750)
($7,200)

Expected
Profit
$3,878
$2,868
$3,107
$3,324
$3,515
$3,673
$3,792
$3,869

Expected Profit - Trees Ordered

$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
90

140

190
Trees Ordered

240

Standard
Error
$24
Ex p e cte d P ro fit (in $)

Objective
Profit
($8,100)
($4,500)
($4,950)
($5,400)
($5,850)
($6,300)
($6,750)
($7,200)
($7,650)
($8,100)
($8,550)
($9,000)
($9,450)
($9,900)
($10,350)
($10,800)
($11,250)
($11,700)
($12,150)
($12,600)
($13,050)
($13,500)

Ex p e cte d P ro fit (in $)

185
3275
57.227615711

Expected Profit - Trees Ordered

$4,000
$3,500
$3,000
$2,500
$2,000
$1,500

290

$3,898
$3,878
$3,808
$3,686
$3,514
$3,293
$3,029
$2,728
$2,392
$2,027
$1,639
$1,232
$812
$382

Ex p e cte d P ro fit

($7,650)
($8,100)
($8,550)
($9,000)
($9,450)
($9,900)
($10,350)
($10,800)
($11,250)
($11,700)
($12,150)
($12,600)
($13,050)
($13,500)

Expected Profit - Trees Ordered

$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
90

140

190
Trees Ordered

240

290

Expected Profit - Trees Ordered

190
Trees Ordered

240

290

Expected Profit - Trees Ordered

Assumption 2

Expected Profit - Trees Ordered

Assumption 2

190
Trees Ordered

240

290

Statistics
Profit
Profit (E19) Profit (E20) Profit (E21) Profit (E22) Profit (E23)
Trials
10000
10000
10000
10000
10000
10000
Mean
$3,727
$3,000
$3,148
$3,296
$3,443
$3,591
Median
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
Mode
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
Standard Deviation
$2,352
$0
$302
$603
$905
$1,207
Variance
$5,531,343
$0
$90,983
$363,932
$818,848 $1,455,730
Skewness
-1.05
---1.48
-1.48
-1.48
-1.48
Kurtosis
2.48
--3.18
3.18
3.18
3.18
Coeff. of Variability
0.6310
0.00
0.0958
0.1830
0.2628
0.3360
Minimum
($600)
$3,000
$2,550
$2,100
$1,650
$1,200
Maximum
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
Range Width
$6,000
$0
$750
$1,500
$2,250
$3,000
Mean Std. Error
$24
$0
$3
$6
$9
$12

Profit (E24) Profit (E25) Profit (E26) Profit (E27) Profit (E28) Profit (E29) Profit (E30) Profit (E31)
10000
10000
10000
10000
10000
10000
10000
10000
$3,739
$3,735
$3,731
$3,727
$3,723
$3,719
$3,451
$3,183
$4,500
$4,800
$5,100
$5,400
$5,700
$6,000
$5,550
$5,100
$4,500
$4,800
$5,100
$5,400
$5,700
$6,000
$5,550
$5,100
$1,508
$1,758
$2,043
$2,352
$2,676
$3,010
$3,161
$3,337
$2,274,578 $3,088,978 $4,174,567 $5,531,343 $7,159,308 $9,058,460 $9,992,246 $11,132,824
-1.48
-1.38
-1.21
-1.05
-0.9234
-0.8229
-0.7604
-0.6570
3.18
3.04
2.76
2.48
2.24
2.04
1.97
1.91
0.4033
0.4705
0.5476
0.6310
0.7186
0.8092
0.9159
1.05
$750
$300
($150)
($600)
($1,050)
($1,500)
($1,950)
($2,400)
$4,500
$4,800
$5,100
$5,400
$5,700
$6,000
$6,300
$6,600
$3,750
$4,500
$5,250
$6,000
$6,750
$7,500
$8,250
$9,000
$15
$18
$20
$24
$27
$30
$32
$33

Profit (E32) Profit (E33) Profit (E34) Profit (E35) Profit (E36) Profit (E37) Profit (E38)
10000
10000
10000
10000
10000
10000
10000
$2,915
$2,647
$2,379
$1,966
$1,553
$1,139
$726
$4,650
$4,200
$3,750
$3,300
$2,850
$2,400
$1,950
$4,650
$4,200
$3,750
$3,300
$2,850
$2,400
$1,950
$3,533
$3,746
$3,974
$4,025
$4,081
$4,142
$4,209
$12,480,194 $14,034,356 $15,795,310 $16,197,110 $16,651,236 $17,157,691 $17,716,473
-0.5295
-0.3920
-0.2542
-0.2211
-0.1765
-0.1211
-0.0555
1.87
1.85
1.85
1.86
1.89
1.95
2.04
1.21
1.42
1.67
2.05
2.63
3.64
5.80
($2,850)
($3,300)
($3,750)
($4,200)
($4,650)
($5,100)
($5,550)
$6,900
$7,200
$7,500
$7,800
$8,100
$8,400
$8,700
$9,750
$10,500
$11,250
$12,000
$12,750
$13,500
$14,250
$35
$37
$40
$40
$41
$41
$42

Profit (E39) Profit (E43) Profit (E44) Profit (E45) Profit (E46) Profit (E47) Profit (E48) Profit (E49)
10000
10000
10000
10000
10000
10000
10000
10000
$313
$3,878
$2,868
$3,107
$3,324
$3,515
$3,673
$3,792
$1,500
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
$4,500
$1,500
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
$4,500
$4,281
$2,382
$662
$812
$984
$1,178
$1,392
$1,624
$18,327,583 $5,675,314
$437,923
$658,929
$968,216 $1,387,856 $1,937,692 $2,636,696
0.0194
-1.81
-6.76
-5.65
-4.75
-4.01
-3.41
-2.90
2.16
6.12
57.69
41.11
29.69
21.80
16.30
12.40
13.69
0.6143
0.2307
0.2612
0.2960
0.3352
0.3790
0.4282
($6,000)
($10,501)
($6,901)
($7,351)
($7,801)
($8,251)
($8,701)
($9,151)
$9,000
$5,400
$3,000
$3,300
$3,600
$3,900
$4,200
$4,500
$15,000
$15,901
$9,901
$10,651
$11,401
$12,151
$12,901
$13,651
$43
$24
$7
$8
$10
$12
$14
$16

Profit (E50) Profit (E51) Profit (E52) Profit (E53) Profit (E54) Profit (E55) Profit (E56) Profit (E57)
10000
10000
10000
10000
10000
10000
10000
10000
$3,869
$3,898
$3,878
$3,808
$3,686
$3,514
$3,293
$3,029
$4,800
$5,100
$5,400
$5,408
$4,958
$4,508
$4,058
$3,608
$4,800
$5,100
$5,400
$5,700
$6,000
$6,300
$6,600
$6,900
$1,869
$2,124
$2,382
$2,639
$2,888
$3,122
$3,338
$3,531
$3,493,710 $4,509,795 $5,675,314 $6,966,160 $8,339,557 $9,748,424 $11,141,512 $12,470,916
-2.48
-2.12
-1.81
-1.54
-1.31
-1.10
-0.9263
-0.7693
9.61
7.60
6.12
5.05
4.26
3.69
3.29
3.01
0.4831
0.5448
0.6143
0.6931
0.7834
0.8886
1.01
1.17
($9,601)
($10,051)
($10,501)
($10,951)
($11,401)
($11,851)
($12,301)
($12,751)
$4,800
$5,100
$5,400
$5,700
$6,000
$6,300
$6,600
$6,900
$14,401
$15,151
$15,901
$16,651
$17,401
$18,151
$18,901
$19,651
$19
$21
$24
$26
$29
$31
$33
$35

Profit (E58) Profit (E59) Profit (E60) Profit (E61) Profit (E62) Profit (E63) Profit (E64)
10000
10000
10000
10000
10000
10000
10000
$2,728
$2,392
$2,027
$1,639
$1,232
$812
$382
$3,158
$2,708
$2,258
$1,808
$1,358
$908
$458
$7,200
$7,500
$7,800
$8,100
$8,400
$8,700
$9,000
$3,703
$3,846
$3,965
$4,059
$4,130
$4,184
$4,223
$13,711,090 $14,795,056 $15,721,313 $16,475,362 $17,060,549 $17,506,008 $17,831,219
-0.6300
-0.5108
-0.4080
-0.3218
-0.2515
-0.1944
-0.1497
2.82
2.71
2.66
2.65
2.67
2.71
2.75
1.36
1.61
1.96
2.48
3.35
5.15
11.06
($13,201)
($13,651)
($14,101)
($14,551)
($15,001)
($15,451)
($15,901)
$7,200
$7,500
$7,800
$8,100
$8,400
$8,700
$9,000
$20,401
$21,151
$21,901
$22,651
$23,401
$24,151
$24,901
$37
$38
$40
$41
$41
$42
$42