APPLIED OPERATION RESEARCH
UNIT IV
INVENTORY MODELS, SIMULATION AND DECISION THEORY
Inventory Models – EOQ and EBQ Models (With and without shortages), Quantity Discount Models.
Decision making under risk – Decision trees – Decision making under uncertainty. Monte-carlo
simulation.
Contents
4.1 Inventory Models ______________________________________________________ 2
4.1.1 EOQ models __________________________________________________________ 2
4.1.2 EPQ models __________________________________________________________ 6
4.1.3 Quantity discount models ________________________________________________ 11
4.2 Decision making under risk ______________________________________________ 22
4.2.1 Monte Carlo Simulation _________________________________________________ 22
4.2.2 Decision making under uncertainity ________________________________________ 30
4.2.3 Decision trees _________________________________________________________ 33
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