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Business, 24.10.2019 04:00 fitzghost

Argue for or against for each statement below, argue for or against it. (a) a firm facing stable demand and costs (i. e., an eoq-type setting) operates with order quantity q for a year. due to an increase in the opportunity cost of capital, the per-unit annual holding cost doubles in the next year from h to 2h, and as a result the firm cuts its order size in half, .e., now orders q/2 units in each order. then it must be that the firm either did not order optimally when annual per-unit holding cost was h, or when the same cost became 2h (b) in a newsvendor-type setting (i. e., one-shot ordering problem in the presence of demand uncertainty), an increased order quantity leads to (weakly) increased expected sales. (c) in a newsvendor-type setting, the expected fraction of demand met (i. e., fraction of expected sales over expected demand) equals one minus stock-out probability.

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