Exercise one

Payoff table
Scenario 1
Alternative 1 32
Alternative 2 40
Alternative 3 98
Alternative 4 42
Alternative 5 32
Alternative 6 7
Alternative 7 92
Alternative 8 2
Alternative 9 67
Alternative 10 14
Alternative 11 45
Alternative 12 57

Benchmark
Scenario 1
Optimal value 98
Optimal solution Alternative 3

Regret table
Scenario 1
Alternative 1 66
Alternative 2 58
Alternative 3 0
Alternative 4 56
Alternative 5 66
Alternative 6 91
Alternative 7 6
Alternative 8 96
Alternative 9 31
Alternative 10 84
Alternative 11 53
Alternative 12 41
Scenario 2 Scenario 3
65 95
78 67
97 8
75 23
66 45
2 56
49 66
55 10
50 63
5 72
11 88
8 77

Scenario 2 Scenario 3
97 95
Alternative 3 Alternative 1

Scenario 2 Scenario 3
32 0
19 28
 0 87
22 72
31 50
95 39
48 29
42 85
47 32
92 23
86 7
89 18
Scenario 4 Scenario 5
28 27
80 6
99 32
3 89
0 55
98 88
47 86
44 36
89 73
30 30
88 7
6 41

Scenario 4 Scenario 5
99 89
Alternative 3 Alternative 4

Scenario 4 Scenario 5
71 62
19 83
 0 57
96 0
99 34
1 1
52 3
55 53
10 16
69 59
11 82
93 48
Scenario 6 Scenario 7
74 94
31 84
62 74
21 79
42 67
25 22
50 85
43 61
29 18
96 81
25 76
14 48

Scenario 6 Scenario 7
96 94
Alternative 10 Alternative 1

Scenario 6 Scenario 7
22 0
65 10
34 20
75 15
54 27
71 72
46 9
53 33
67 76
0 13
71 18
82 46
Scenario 8
69
56
21
37
57
6
54
61
82
22
57
58

Scenario 8
82
Alternative 9

Scenario 8
13 Alternative 1
26 Alternative 2
61 Alternative 3
45 Alternative 4
25 Alternative 5
76 Alternative 6
28 Alternative 7
21 Alternative 8
0 Alternative 9
60 Alternative 10
25 Alternative 11
24 Alternative 12
Max regret
71
83
87
96
99
95
52
96
76
92
86
93
 Part 1: Discrete demand Distribution
Demand Probability F(q)=P(D≤q) E[Sales] E[leftover] E[Shortage]
Low 10 0.5 0.5 10 20 0
Medium 20 0.2 0.7 20 10 0
High 40 0.2 0.9 30 0 10
Very High 80 0.1 1 30 0 50
18 12 7
q 30
Mean Demand 25
Variance 465 Prob Stock out Pr(D ≥ 30) = Pr(D = 40) + Pr(D = 80) = 0.2+
S.D 21.5638586528
z value 0.23186944788 Unmet demand (0.2) × (40 − 30) + (0.1) × (80 − 30) =2+5 =
Pr(D≤Q) 0.59168029253
Pr(D>Q) 0.40831970747

Part2: Uniform Demand

D Uniform (0, 10)
q 7
PDF: fD(x) 1/7,0≤x≤10
CDF: FD(x) x/7,0≤x≤10
FD(q)=FD(7)
Critical Ratio 0.7
Pr(D≤Q) 0.7
Pr(D>Q) 0.3
∫25_7^10▒█((𝑥−7)/10 𝑑𝑥=0.45@

Unmet demand

Part3: Exponential Demand

D Exp(1)
q 4
F(q) 1-e^(-4) 1-e^(-4)
Pr(D≤Q) 0.98168436111
Pr(D>=Q) 0.01831563889
Unmet Demand 0.01831563889
 (Demand)^2
100
400
1600
6400

0) = Pr(D = 40) + Pr(D = 80) = 0.2+0.1=0.3

(40 − 30) + (0.1) × (80 − 30) =2+5 = 7

25_7^10▒█((𝑥−7)/10 𝑑𝑥=0.45@)

emand
 Uncertain Demand model

Decision variables
Price 2.749999997 $

Input
Model Probability
D1(p) 40-10p 0.5
D2(p) 50-15p 0.333333333
D3(p) 60-20p 0.166666667
Cost 2

Work area
Model Probability CDF
D1(p) 12.50000003 0.5 0.5
D2(p) 8.750000048 0.333333333 0.833333
D3(p) 5.000000064 0.166666667 1
Mean Demand 10.00000004

Optimization
Objective function
Maximize price 7.5
Exercise four

Demand
Demand level
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
Mean Demand

Economic inputs
Selling price (p)
Salve value (s)
 Order cost (c)

Order quantity

Order quantity (q)

Demand level
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75.00
80
Probability (PMF) CDF
0.05 0.05
0.04 0.09
0.05 0.15
0.10 0.24
0.07 0.31
0.07 0.38
0.11 0.49
0.05 0.54
0.04 0.58
0.11 0.69
0.03 0.72
0.06 0.78
0.03 0.82
0.04 0.86
0.05 0.91
0.09 1.00
41.86

30
1
 15

60

Q*
Probability (PMF) 10
0.05 5.00
0.04 150.00
0.05 150.00
0.10 150.00
0.07 150.00
0.07 150.00
0.11 150.00
0.05 150.00
0.04 150.00
0.11 150.00
0.03 150.00
0.06 150.00
0.03 150.00
0.04 150.00
0.05 150.00
0.09 150.00
142.2
 Q*
30 60
-275.00 -695.00
-130.00 -550.00
15.00 -405.00
160.00 -260.00
305.00 -115.00
450.00 30.00
450.00 175.00
450.00 320.00
450.00 465.00
450.00 610.00
450.00 755.00
450.00 900.00
450.00 900.00
450.00 900.00
450.00 900.00
450.00 900.00
326.9 283.7
Exercise five

Uniform
CSL
0.9
0.95
0.98

Exponential
CSL
0.9
0.95
0.98

Normal
CSL
0.9
0.95
0.98

Gamma
CSL
0.9
0.95
0.98
Uniform(50,200)
Order quantity
185
192.5
197

Exponential(0.1), Rate(0.10)
Order quantity
23.0258509299405
29.9573227355399
39.1202300542814

Norm(200,50)
Order quantity
264.07757827723
282.242681347574
302.687445531591

Gamma(2,2)
Order quantity
7.77944033973486
9.48772903678115
11.6678434038348