Matching Supply with Demand: An Introduction to Operations Management 2nd Edition by Cachon Terwiesch

تمرين 1

(O'Neill) Consider the case in the relationship between O'Neill and TEC with unlimited, but expensive, reactive capacity, that is, TEC allows O'Neill to submit a second order but charges O'Neill a premium for those units. (See Figure 12.1.) Instead of a 20 percent premium, suppose TEC were to charge O'Neill only a 10 percent premium for units in the second order.
a. What is O'Neill's optimal first order quantity of Hammer 3/2s?
b. What is O'Neill's maximum expected profit with the Hammer 3/2?
c. How many units should TEC expect O'Neill will order in the second order?
d. What fraction of the mismatch cost is eliminated by this reactive capacity opportunity?