In the picture below, what can you infer? Note: we are going to order according to the light blue area, which is slightly to the left of the average demand. Area = P=C₂/ (C₁+C) = prob of being "over" ஜுயவj D jo ● ?] -z-norm.s.inv(P.) μ expected demand = std dev in demand (# from μ) -3 -2 -1 Co lo + μtμ - On this scale put the actual numbers specific to the problem 1 2 3 (# from 4) O You are more likely to have some product left over than run out. O Cost of understocking must have been higher than cost of overstocking. Demand will be always be below average.. O You are more likely to run out of product than have some left over.

MATLAB: An Introduction with Applications
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Author:Amos Gilat
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In the picture below, what can you infer? Note: we are going to order according to the light blue
area, which is slightly to the left of the average demand.
Area =
Pe=C₂! (C₂+₂) =
prob of being "over"
z (# σ from μ)
-1
of σ from H.
· z=norm.s.inv(P.)
μ= expected demand
1
= std dev in demand
2
z (#from μ)
itu
Co
Q=zo+μ
- On this scale put the actual numbers specific to the problem
You are more likely to have some product left over than run out.
Cost of understocking must have been higher than cost of overstocking.
Demand will be always be below average..
You are more likely to run out of product than have some left over.
Transcribed Image Text:In the picture below, what can you infer? Note: we are going to order according to the light blue area, which is slightly to the left of the average demand. Area = Pe=C₂! (C₂+₂) = prob of being "over" z (# σ from μ) -1 of σ from H. · z=norm.s.inv(P.) μ= expected demand 1 = std dev in demand 2 z (#from μ) itu Co Q=zo+μ - On this scale put the actual numbers specific to the problem You are more likely to have some product left over than run out. Cost of understocking must have been higher than cost of overstocking. Demand will be always be below average.. You are more likely to run out of product than have some left over.
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