Determine the optimal inventory policy

Reference no: EM131105217

Determine the optimal inventory policy when the goods are to be ordered at the end of every month from now on. The cost of bringing the inventory level up to y when x already is available is given by 2(y x). Similarly, the cost of having the monthly demand D exceed y is given by 5(D y). The probability density function for D is given by The holding cost when y exceeds D is given by y D. A monthly discount factor of 0.95 is used.

Reference no: EM131105217

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