Find the optimal k q policy for prob 197-10 for an, Ask an Expert

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Find the optimal (k, Q) policy for Prob. 19.7-10 for an infinite-period model with a discount factor of α = 0.90.

Prob. 19.7-10

Consider a one-period model where the only two costs are the holding cost, given by

If you order, you must order an integer number of batches of 100 units each, and this quantity is delivered immediately. Let G(y) denote the total expected cost when there are y units available for the period (after ordering).

(a) Write the expression for G(y).

(b) What is the optimal ordering policy?

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