Consider the EOQ model with the twist

Assignment Help Operation Management

Reference no: EM131432755

Consider the EOQ model with the following twist. In addition to choosing the order quantity Q, the system manager can choose a selling price p for the product. Demand is affected by price and linearly decreases as a function of price. Specifically, D = b – ap where a and b are known positive numbers. The objective of the manager is to choose both Q and P in order to maximize profit.

a) Provide an expression for total profit, under all the other usual assumptions of the EOQ model, given that p and Q are decision variables.

b) For a fixed order quantity, what is the optimal price?

c) For a fixed price, what is the optimal order quantity?

d) Discuss how to jointly optimize with respect to both order quantity and price.

Reference no: EM131432755

Questions Cloud

Identify two companies that have quality-based strategies : Identify two companies that have quality-based strategies. What role does IT play in small businesses that are not ecommerce companies?

Productivity is the problem : A memo to Senior Management for the need for a team to solve a problem, which also identifies the team roster. 2) A plan of action and milestones for the team, including timelines 3) An agenda for the first meeting.

What is the optimal size of the group to be trained : The Delly temporary service agency trains people to do secretarial (word processing) work. If a firm needs someone for a short period of time (a few days to a few weeks) then that firm hires the temporary employee through Delly. What problem type or ..

Describe characteristics of different types of work groups : Describe the characteristics of different types of work groups. Differentiate between a group and a team. Why do groups need rules? Explain the importance of group norms in controlling and conforming behaviors.

Consider the EOQ model with the twist : Consider the EOQ model with the following twist. In addition to choosing the order quantity Q, the system manager can choose a selling price p for the product. Demand is affected by price and linearly decreases as a function of price. For a fixed pri..

What is the optimal order quantity at each warehouse : A distributor of printer copier spare parts maintains four regional warehouses in the United States. Each warehouse faces a fairly constant demand that can be modeled by a constant demand rate of 200 units per day. What is the optimal order quantity ..

What is optimal order quantity for distributor at warehouse : Consider a distributor of a seasonal item that maintains 2 regional warehouses. Demand at each warehouse is affected by local market conditions, which can either be excellent (E), good (G), or poor (P). Each scenario is equally likely. What is the op..

Staffing the organization : Given that Civil Rights legislation is now 50 years old, how well are employers doing in hiring, developing and promoting employees based upon merit, and not upon demographic? In other words, how successful do you think Civil Rights legislation has b..

What is purpose of general agreement on tariffs and trade : What is the purpose of the General Agreement on Tariffs and Trade? What is the WTO( world trade organuzation) and what is the connection between GATT (General agreement on tariffs and trade) and WTO? How might sociocultural differences affect sales o..

User Account

All Pages