Inventory Management, SCM, PGP33, IIM Lucknow

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑃𝑟𝑜𝑓𝑖𝑡
= 𝑄 (𝑝 − 𝑐 )[1 − 𝐹 (𝑄)] − 𝑄(𝑐 − 𝑠)𝐹 (𝑄)
𝑄−𝐷
+ (𝑝 − 𝑠)𝐷 × 𝐹𝑠 ( )
𝜎
𝜎 1𝐷 2 1(𝑄−𝐷)2
− −
+ {(𝑝 − 𝑠) (𝑒 2𝜎2 −𝑒 2 𝜎2 )}
√2𝜋

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑂𝑣𝑒𝑟𝑠𝑡𝑜𝑐𝑘
𝑄−𝐷
= 𝑄 × 𝐹 (𝑄) − 𝐷 × 𝐹𝑠 ( )
𝜎
𝜎 1𝐷 2 1(𝑄−𝐷)2
− −
+{ (𝑒 2 𝜎2 −𝑒 2 𝜎2 )}
√2𝜋

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑈𝑛𝑑𝑒𝑟𝑠𝑡𝑜𝑐𝑘
𝑄−𝐷 𝜎 1(𝑄−𝐷)2
−
= 𝐷 × {1 − 𝐹𝑠 ( )} + { (𝑒 2 𝜎2 )}
𝜎 √2𝜋
− 𝑄 × (1 − 𝐹(𝑄))

𝑂𝑝𝑡𝑖𝑚𝑎𝑙 𝑙𝑜𝑡 𝑠𝑖𝑧 𝑓𝑜𝑟 𝑝𝑟𝑖𝑐𝑒 𝑐𝑖 𝑖𝑠 𝑄𝑖

2𝐷(𝑆 + 𝑉𝑖−1 − 𝑞𝑖−1 𝑐𝑖 )
= √
ℎ𝑐𝑖