DMSC3e
38
This is the probabilistic forecast from examples 2-2 to 2-5 and the examples in Chapter 4. Demandrobability Weighted Demand 8000 11% 880 10000 11% 1100 12000 28% 3360 14000 22% 3080 16000 18% 2880 18000 10% 1800 Average 13100 8000 10 0% 5% 10% 15% 20% 25% 30% D Probability
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Transcript of DMSC3e
This is the probabilistic forecast from examples 2-2 to 2-5and the examples in Chapter 4.
Demand Probability Weighted Demand8000 11% 880
10000 11% 110012000 28% 336014000 22% 308016000 18% 288018000 10% 1800
Average 13100
8000 10000 12000 14000 16000 180000%
5%
10%
15%
20%
25%
30%
Demand Scenarios
Sales
Pro
ba
bil
ity
8000 10000 12000 14000 16000 180000%
5%
10%
15%
20%
25%
30%
Demand Scenarios
Sales
Pro
ba
bil
ity
These are the expected (or average) profit calculations for various different order levels as described in examples 2-2 to 2-5
These are the cost parameters:
Item CostVariable Production Cost INR 80.00Fixed Production Cost INR 100,000.00Selling Price INR 125.00Salvage Value INR 20.00
These are the average revenue calculations:
Demand Probability5000 5500
8000 11% INR 125,000.00 INR 147,500.0010000 11% INR 125,000.00 INR 147,500.0012000 28% INR 125,000.00 INR 147,500.0014000 22% INR 125,000.00 INR 147,500.0016000 18% INR 125,000.00 INR 147,500.0018000 10% INR 125,000.00 INR 147,500.00
Average Profit INR 125,000.00 INR 147,500.00Maximum:
5000 10000 15000INR 0
INR 200,000
INR 400,000
Expected Profit
Order Quantity
Pro
fit
These are the expected (or average) profit calculations for various different order levels
6000 6500 7000 7500 8000 8500INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 230,000.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 282,500.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 282,500.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 282,500.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 282,500.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 282,500.00INR 170,000.00 INR 192,500.00 INR 215,000.00 INR 237,500.00 INR 260,000.00 INR 276,725.00
5000 10000 15000INR 0
INR 200,000
INR 400,000
Expected Profit
Order Quantity
Pro
fit
Profit for a Given Production Level9000 9500 10000 10500 11000 11500
INR 200,000.00 INR 170,000.00 INR 140,000.00 INR 110,000.00 INR 80,000.00 INR 50,000.00INR 305,000.00 INR 327,500.00 INR 350,000.00 INR 320,000.00 INR 290,000.00 INR 260,000.00INR 305,000.00 INR 327,500.00 INR 350,000.00 INR 372,500.00 INR 395,000.00 INR 417,500.00INR 305,000.00 INR 327,500.00 INR 350,000.00 INR 372,500.00 INR 395,000.00 INR 417,500.00INR 305,000.00 INR 327,500.00 INR 350,000.00 INR 372,500.00 INR 395,000.00 INR 417,500.00INR 305,000.00 INR 327,500.00 INR 350,000.00 INR 372,500.00 INR 395,000.00 INR 417,500.00INR 293,450.00 INR 310,175.00 INR 326,900.00 INR 337,850.00 INR 348,800.00 INR 359,750.00
12000 12500 13000 13500 14000 14500INR 20,000.00 -INR 10,000.00 -INR 40,000.00 -INR 70,000.00 -INR 100,000.00 -INR 130,000.00
INR 230,000.00 INR 200,000.00 INR 170,000.00 INR 140,000.00 INR 110,000.00 INR 80,000.00INR 440,000.00 INR 410,000.00 INR 380,000.00 INR 350,000.00 INR 320,000.00 INR 290,000.00INR 440,000.00 INR 462,500.00 INR 485,000.00 INR 507,500.00 INR 530,000.00 INR 500,000.00INR 440,000.00 INR 462,500.00 INR 485,000.00 INR 507,500.00 INR 530,000.00 INR 552,500.00INR 440,000.00 INR 462,500.00 INR 485,000.00 INR 507,500.00 INR 530,000.00 INR 552,500.00INR 370,700.00 INR 366,950.00 INR 363,200.00 INR 359,450.00 INR 355,700.00 INR 340,400.00
INR 370,700
15000 15500 16000 16500-INR 160,000.00 -INR 190,000.00 -INR 220,000.00 -INR 250,000.00
INR 50,000.00 INR 20,000.00 -INR 10,000.00 -INR 40,000.00INR 260,000.00 INR 230,000.00 INR 200,000.00 INR 170,000.00INR 470,000.00 INR 440,000.00 INR 410,000.00 INR 380,000.00INR 575,000.00 INR 597,500.00 INR 620,000.00 INR 590,000.00INR 575,000.00 INR 597,500.00 INR 620,000.00 INR 642,500.00INR 325,100.00 INR 309,800.00 INR 294,500.00 INR 269,750.00
This is the buy back contract example from Chapter 4from the inventory chapter:
These are the cost and contract parameters:
Item PriceRetailer sells for: INR 125.00Manufacturer sells for: INR 80.00Salvage: INR 20.00Manufacturer buy back: INR 55.00 the manufacturer will buy them back, and salvage them herself.Fixed Production Cost: INR 100,000.00Variable Production Cost: INR 35.00
This is the retailer's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 225,000.00 INR 270,000.00 INR 315,000.0010000 11% INR 225,000.00 INR 270,000.00 INR 315,000.0012000 28% INR 225,000.00 INR 270,000.00 INR 315,000.0014000 22% INR 225,000.00 INR 270,000.00 INR 315,000.0016000 18% INR 225,000.00 INR 270,000.00 INR 315,000.0018000 10% INR 225,000.00 INR 270,000.00 INR 315,000.00
Average Profit INR 225,000.00 INR 270,000.00 INR 315,000.00Maximum:
This is the manufacturer's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 125,000.00 INR 170,000.00 INR 215,000.0010000 11% INR 125,000.00 INR 170,000.00 INR 215,000.0012000 28% INR 125,000.00 INR 170,000.00 INR 215,000.0014000 22% INR 125,000.00 INR 170,000.00 INR 215,000.0016000 18% INR 125,000.00 INR 170,000.00 INR 215,000.0018000 10% INR 125,000.00 INR 170,000.00 INR 215,000.00
Average Profit INR 125,000.00 INR 170,000.00 INR 215,000.00Maximum:
This is the expected (or average) total profit:
Total Average Profit: INR 350,000.00 INR 440,000.00 INR 530,000.00
NOTE: The Retailer can either salvage goods, or
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
the manufacturer will buy them back, and salvage them herself.
Profit for a Given Retailer Order Level8000 9000 10000 11000 12000 13000
INR 360,000.00 INR 335,000.00 INR 310,000.00 INR 285,000.00 INR 260,000.00 INR 235,000.00INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 425,000.00 INR 400,000.00 INR 375,000.00INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00 INR 540,000.00 INR 515,000.00INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00 INR 540,000.00 INR 585,000.00INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00 INR 540,000.00 INR 585,000.00INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00 INR 540,000.00 INR 585,000.00INR 360,000.00 INR 397,300.00 INR 434,600.00 INR 464,200.00 INR 493,800.00 INR 503,800.00
Profit for a Given Retailer Order Level8000 9000 10000 11000 12000 13000
INR 260,000.00 INR 270,000.00 INR 280,000.00 INR 290,000.00 INR 300,000.00 INR 310,000.00INR 260,000.00 INR 305,000.00 INR 350,000.00 INR 360,000.00 INR 370,000.00 INR 380,000.00INR 260,000.00 INR 305,000.00 INR 350,000.00 INR 395,000.00 INR 440,000.00 INR 450,000.00INR 260,000.00 INR 305,000.00 INR 350,000.00 INR 395,000.00 INR 440,000.00 INR 485,000.00INR 260,000.00 INR 305,000.00 INR 350,000.00 INR 395,000.00 INR 440,000.00 INR 485,000.00INR 260,000.00 INR 305,000.00 INR 350,000.00 INR 395,000.00 INR 440,000.00 INR 485,000.00INR 260,000.00 INR 301,150.00 INR 342,300.00 INR 379,600.00 INR 416,900.00 INR 444,400.00
INR 620,000.00 INR 698,450.00 INR 776,900.00 INR 843,800.00 INR 910,700.00 INR 948,200.00
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
14000 15000 16000 17000 18000INR 210,000.00 INR 185,000.00 INR 160,000.00 INR 135,000.00 INR 110,000.00INR 350,000.00 INR 325,000.00 INR 300,000.00 INR 275,000.00 INR 250,000.00INR 490,000.00 INR 465,000.00 INR 440,000.00 INR 415,000.00 INR 390,000.00INR 630,000.00 INR 605,000.00 INR 580,000.00 INR 555,000.00 INR 530,000.00INR 630,000.00 INR 675,000.00 INR 720,000.00 INR 695,000.00 INR 670,000.00INR 630,000.00 INR 675,000.00 INR 720,000.00 INR 765,000.00 INR 810,000.00INR 513,800.00 INR 508,400.00 INR 503,000.00 INR 485,000.00 INR 467,000.00
INR 513,800
14000 15000 16000 17000 18000INR 320,000.00 INR 330,000.00 INR 340,000.00 INR 350,000.00 INR 360,000.00INR 390,000.00 INR 400,000.00 INR 410,000.00 INR 420,000.00 INR 430,000.00INR 460,000.00 INR 470,000.00 INR 480,000.00 INR 490,000.00 INR 500,000.00INR 530,000.00 INR 540,000.00 INR 550,000.00 INR 560,000.00 INR 570,000.00INR 530,000.00 INR 575,000.00 INR 620,000.00 INR 630,000.00 INR 640,000.00INR 530,000.00 INR 575,000.00 INR 620,000.00 INR 665,000.00 INR 710,000.00INR 471,900.00 INR 491,700.00 INR 511,500.00 INR 525,000.00 INR 538,500.00
INR 538,500
INR 985,700.00 INR 1,000,100.00 INR 1,014,500.00 INR 1,010,000.00 INR 1,005,500.00
INR 1,014,500
This is the revenue sharing contract example from Chapter 4.
These are the cost and contract parameters:
Item PriceRetailer sells for: INR 125.00Manufacturer sells for: INR 60.00Salvage: INR 20.00Revenue Sharing: INR 0.15Fixed Production Cost: INR 100,000.00 the manufacturer.Variable Production Cost: INR 35.00
This is the retailer's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 231,250.00 INR 277,500.00 INR 323,750.0010000 11% INR 231,250.00 INR 277,500.00 INR 323,750.0012000 28% INR 231,250.00 INR 277,500.00 INR 323,750.0014000 22% INR 231,250.00 INR 277,500.00 INR 323,750.0016000 18% INR 231,250.00 INR 277,500.00 INR 323,750.0018000 10% INR 231,250.00 INR 277,500.00 INR 323,750.00
Average Profit INR 231,250.00 INR 277,500.00 INR 323,750.00Maximum:
This is the manufacturer's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 118,750.00 INR 162,500.00 INR 206,250.0010000 11% INR 118,750.00 INR 162,500.00 INR 206,250.0012000 28% INR 118,750.00 INR 162,500.00 INR 206,250.0014000 22% INR 118,750.00 INR 162,500.00 INR 206,250.0016000 18% INR 118,750.00 INR 162,500.00 INR 206,250.0018000 10% INR 118,750.00 INR 162,500.00 INR 206,250.00
Average Profit INR 118,750.00 INR 162,500.00 INR 206,250.00Maximum:
This is the expected (or average) total profit:
Total Average Profit: INR 350,000.00 INR 440,000.00 INR 530,000.00
NOTE: The Retailer pays this percentage of revenue to
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
Profit for a Given Retailer Order Level8000 9000 10000 11000 12000 13000
INR 370,000.00 INR 330,000.00 INR 290,000.00 INR 250,000.00 INR 210,000.00 INR 170,000.00INR 370,000.00 INR 416,250.00 INR 462,500.00 INR 422,500.00 INR 382,500.00 INR 342,500.00INR 370,000.00 INR 416,250.00 INR 462,500.00 INR 508,750.00 INR 555,000.00 INR 515,000.00INR 370,000.00 INR 416,250.00 INR 462,500.00 INR 508,750.00 INR 555,000.00 INR 601,250.00INR 370,000.00 INR 416,250.00 INR 462,500.00 INR 508,750.00 INR 555,000.00 INR 601,250.00INR 370,000.00 INR 416,250.00 INR 462,500.00 INR 508,750.00 INR 555,000.00 INR 601,250.00INR 370,000.00 INR 406,762.50 INR 443,525.00 INR 470,800.00 INR 498,075.00 INR 501,200.00
Profit for a Given Retailer Order Level8000 9000 10000 11000 12000 13000
INR 250,000.00 INR 275,000.00 INR 300,000.00 INR 325,000.00 INR 350,000.00 INR 375,000.00INR 250,000.00 INR 293,750.00 INR 337,500.00 INR 362,500.00 INR 387,500.00 INR 412,500.00INR 250,000.00 INR 293,750.00 INR 337,500.00 INR 381,250.00 INR 425,000.00 INR 450,000.00INR 250,000.00 INR 293,750.00 INR 337,500.00 INR 381,250.00 INR 425,000.00 INR 468,750.00INR 250,000.00 INR 293,750.00 INR 337,500.00 INR 381,250.00 INR 425,000.00 INR 468,750.00INR 250,000.00 INR 293,750.00 INR 337,500.00 INR 381,250.00 INR 425,000.00 INR 468,750.00INR 250,000.00 INR 291,687.50 INR 333,375.00 INR 373,000.00 INR 412,625.00 INR 447,000.00
INR 620,000.00 INR 698,450.00 INR 776,900.00 INR 843,800.00 INR 910,700.00 INR 948,200.00
The Retailer pays this percentage of revenue to
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Dist. P
Mfg. P
Total P.
Quantity
Pro
fit
(IN
R)
14000 15000 16000 17000 18000INR 130,000.00 INR 90,000.00 INR 50,000.00 INR 10,000.00 -INR 30,000.00INR 302,500.00 INR 262,500.00 INR 222,500.00 INR 182,500.00 INR 142,500.00INR 475,000.00 INR 435,000.00 INR 395,000.00 INR 355,000.00 INR 315,000.00INR 647,500.00 INR 607,500.00 INR 567,500.00 INR 527,500.00 INR 487,500.00INR 647,500.00 INR 693,750.00 INR 740,000.00 INR 700,000.00 INR 660,000.00INR 647,500.00 INR 693,750.00 INR 740,000.00 INR 786,250.00 INR 832,500.00INR 504,325.00 INR 488,475.00 INR 472,625.00 INR 441,250.00 INR 409,875.00
INR 504,325
14000 15000 16000 17000 18000INR 400,000.00 INR 425,000.00 INR 450,000.00 INR 475,000.00 INR 500,000.00INR 437,500.00 INR 462,500.00 INR 487,500.00 INR 512,500.00 INR 537,500.00INR 475,000.00 INR 500,000.00 INR 525,000.00 INR 550,000.00 INR 575,000.00INR 512,500.00 INR 537,500.00 INR 562,500.00 INR 587,500.00 INR 612,500.00INR 512,500.00 INR 556,250.00 INR 600,000.00 INR 625,000.00 INR 650,000.00INR 512,500.00 INR 556,250.00 INR 600,000.00 INR 643,750.00 INR 687,500.00INR 481,375.00 INR 511,625.00 INR 541,875.00 INR 568,750.00 INR 595,625.00
INR 595,625
INR 985,700.00 INR 1,000,100.00 INR 1,014,500.00 INR 1,010,000.00 INR 1,005,500.00
INR 1,014,500
This is the global optimal solution in Example 4-6manufacturing case from the inventory chapter:
These are the cost parameters:
Item PriceRetailer sells for: INR 125.00Salvage: INR 20.00Fixed Production Cost: INR 100,000.00Variable Production Cost: INR 35.00
This is the system's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 350,000.00 INR 440,000.00 INR 530,000.0010000 11% INR 350,000.00 INR 440,000.00 INR 530,000.0012000 28% INR 350,000.00 INR 440,000.00 INR 530,000.0014000 22% INR 350,000.00 INR 440,000.00 INR 530,000.0016000 18% INR 350,000.00 INR 440,000.00 INR 530,000.0018000 10% INR 350,000.00 INR 440,000.00 INR 530,000.00
Average Profit INR 350,000.00 INR 440,000.00 INR 530,000.00Maximum:
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Quantity
Syste
m P
rofi
t (I
NR
)
Profit for a Given Order Level8000 9000 10000 11000 12000 13000
INR 620,000.00 INR 605,000.00 INR 590,000.00 INR 575,000.00 INR 560,000.00 INR 545,000.00INR 620,000.00 INR 710,000.00 INR 800,000.00 INR 785,000.00 INR 770,000.00 INR 755,000.00INR 620,000.00 INR 710,000.00 INR 800,000.00 INR 890,000.00 INR 980,000.00 INR 965,000.00INR 620,000.00 INR 710,000.00 INR 800,000.00 INR 890,000.00 INR 980,000.00 INR 1,070,000.00INR 620,000.00 INR 710,000.00 INR 800,000.00 INR 890,000.00 INR 980,000.00 INR 1,070,000.00INR 620,000.00 INR 710,000.00 INR 800,000.00 INR 890,000.00 INR 980,000.00 INR 1,070,000.00INR 620,000.00 INR 698,450.00 INR 776,900.00 INR 843,800.00 INR 910,700.00 INR 948,200.00
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 200,000.00
INR 400,000.00
INR 600,000.00
INR 800,000.00
INR 1,000,000.00
INR 1,200,000.00
Profit vs Order Quantity
Quantity
Syste
m P
rofi
t (I
NR
)
14000 15000 16000 17000 18000INR 530,000.00 INR 515,000.00 INR 500,000.00 INR 485,000.00 INR 470,000.00INR 740,000.00 INR 725,000.00 INR 710,000.00 INR 695,000.00 INR 680,000.00INR 950,000.00 INR 935,000.00 INR 920,000.00 INR 905,000.00 INR 890,000.00
INR 1,160,000.00 INR 1,145,000.00 INR 1,130,000.00 INR 1,115,000.00 INR 1,100,000.00INR 1,160,000.00 INR 1,250,000.00 INR 1,340,000.00 INR 1,325,000.00 INR 1,310,000.00INR 1,160,000.00 INR 1,250,000.00 INR 1,340,000.00 INR 1,430,000.00 INR 1,520,000.00
INR 985,700.00 INR 1,000,100.00 INR 1,014,500.00 INR 1,010,000.00 INR 1,005,500.00INR 1,014,500
This is the payback contract example from Chapter 4.
These are the cost and contract parameters:
Item PriceManufacturer sells for: INR 80.00Distributor sells for: INR 125.00Salvage: INR 20.00Retailer pay back: INR 18.00 Note: Retailer pays this for each unit she doesn't purchaseFixed Production Cost: INR 100,000.00Variable Production Cost: INR 55.00
This is the manufacturer's expected (or average) profit calculations:
Demand Probability5000 6000
8000 11% INR 25,000.00 INR 50,000.0010000 11% INR 25,000.00 INR 50,000.0012000 28% INR 25,000.00 INR 50,000.0014000 22% INR 25,000.00 INR 50,000.0016000 18% INR 25,000.00 INR 50,000.0018000 10% INR 25,000.00 INR 50,000.00
Average Profit INR 25,000.00 INR 50,000.00Maximum:
This is the distributor's expected (or average) profit calculations:
Demand Probability5000 6000
8000 11% INR 225,000.00 INR 270,000.0010000 11% INR 225,000.00 INR 270,000.0012000 28% INR 225,000.00 INR 270,000.0014000 22% INR 225,000.00 INR 270,000.0016000 18% INR 225,000.00 INR 270,000.0018000 10% INR 225,000.00 INR 270,000.00
Average Profit INR 225,000.00 INR 270,000.00Maximum:
This is the expected (or average) total profit:
Total Average Profit: INR 250,000.00 INR 320,000.00
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
Note: Retailer pays this for each unit she doesn't purchase
Profit for a Given Manufacturing Level7000 8000 9000 10000 11000
INR 75,000.00 INR 100,000.00 INR 83,000.00 INR 66,000.00 INR 49,000.00INR 75,000.00 INR 100,000.00 INR 125,000.00 INR 150,000.00 INR 133,000.00INR 75,000.00 INR 100,000.00 INR 125,000.00 INR 150,000.00 INR 175,000.00INR 75,000.00 INR 100,000.00 INR 125,000.00 INR 150,000.00 INR 175,000.00INR 75,000.00 INR 100,000.00 INR 125,000.00 INR 150,000.00 INR 175,000.00INR 75,000.00 INR 100,000.00 INR 125,000.00 INR 150,000.00 INR 175,000.00INR 75,000.00 INR 100,000.00 INR 120,380.00 INR 140,760.00 INR 156,520.00
Profit for a Given Manufacturing Level7000 8000 9000 10000 11000
INR 315,000.00 INR 360,000.00 INR 342,000.00 INR 324,000.00 INR 306,000.00INR 315,000.00 INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 432,000.00INR 315,000.00 INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00INR 315,000.00 INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00INR 315,000.00 INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00INR 315,000.00 INR 360,000.00 INR 405,000.00 INR 450,000.00 INR 495,000.00INR 315,000.00 INR 360,000.00 INR 398,070.00 INR 436,140.00 INR 467,280.00
INR 390,000.00 INR 460,000.00 INR 518,450.00 INR 576,900.00 INR 623,800.00
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
12000 13000 14000 15000 16000INR 32,000.00 INR 15,000.00 -INR 2,000.00 -INR 19,000.00 -INR 36,000.00
INR 116,000.00 INR 99,000.00 INR 82,000.00 INR 65,000.00 INR 48,000.00INR 200,000.00 INR 183,000.00 INR 166,000.00 INR 149,000.00 INR 132,000.00INR 200,000.00 INR 225,000.00 INR 250,000.00 INR 233,000.00 INR 216,000.00INR 200,000.00 INR 225,000.00 INR 250,000.00 INR 275,000.00 INR 300,000.00INR 200,000.00 INR 225,000.00 INR 250,000.00 INR 275,000.00 INR 300,000.00INR 172,280.00 INR 176,280.00 INR 180,280.00 INR 175,040.00 INR 169,800.00
INR 180,280
12000 13000 14000 15000 16000INR 288,000.00 INR 270,000.00 INR 252,000.00 INR 234,000.00 INR 216,000.00INR 414,000.00 INR 396,000.00 INR 378,000.00 INR 360,000.00 INR 342,000.00INR 540,000.00 INR 522,000.00 INR 504,000.00 INR 486,000.00 INR 468,000.00INR 540,000.00 INR 585,000.00 INR 630,000.00 INR 612,000.00 INR 594,000.00INR 540,000.00 INR 585,000.00 INR 630,000.00 INR 675,000.00 INR 720,000.00INR 540,000.00 INR 585,000.00 INR 630,000.00 INR 675,000.00 INR 720,000.00INR 498,420.00 INR 511,920.00 INR 525,420.00 INR 525,060.00 INR 524,700.00
INR 525,420
INR 670,700.00 INR 688,200.00 INR 705,700.00 INR 700,100.00 INR 694,500.00
INR 705,700
17000 18000-INR 53,000.00 -INR 70,000.00INR 31,000.00 INR 14,000.00
INR 115,000.00 INR 98,000.00INR 199,000.00 INR 182,000.00INR 283,000.00 INR 266,000.00INR 325,000.00 INR 350,000.00INR 157,000.00 INR 144,200.00
17000 18000INR 198,000.00 INR 180,000.00INR 324,000.00 INR 306,000.00INR 450,000.00 INR 432,000.00INR 576,000.00 INR 558,000.00INR 702,000.00 INR 684,000.00INR 765,000.00 INR 810,000.00INR 513,000.00 INR 501,300.00
INR 670,000.00 INR 645,500.00
This is the cost sharing example from Chapter 4
These are the cost and contract parameters:
Item PriceManufacturer sells for: INR 62.00Distributor sells for: INR 125.00Salvage: INR 20.00Cost Sharing: INR 0.33Fixed Production Cost: INR 100,000.00Variable Production Cost: INR 55.00
This is the manufacturer's expected (or average) profit calculations:
Demand Probability5000 6000
8000 11% INR 25,750.00 INR 50,900.0010000 11% INR 25,750.00 INR 50,900.0012000 28% INR 25,750.00 INR 50,900.0014000 22% INR 25,750.00 INR 50,900.0016000 18% INR 25,750.00 INR 50,900.0018000 10% INR 25,750.00 INR 50,900.00
Average Profit INR 25,750.00 INR 50,900.00Maximum:
This is the distributor's expected (or average) profit calculations:
Demand Probability5000 6000
8000 11% INR 224,250.00 INR 269,100.0010000 11% INR 224,250.00 INR 269,100.0012000 28% INR 224,250.00 INR 269,100.0014000 22% INR 224,250.00 INR 269,100.0016000 18% INR 224,250.00 INR 269,100.0018000 10% INR 224,250.00 INR 269,100.00
Average Profit INR 224,250.00 INR 269,100.00Maximum:
This is the expected (or average) total profit:
Total Average Profit: INR 250,000.00 INR 320,000.00
NOTE: The distributor pays this percentage of the cost.
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
Profit for a Given Manufacturing Level7000 8000 9000 10000 11000 12000
INR 76,050.00 INR 101,200.00 INR 84,350.00 INR 67,500.00 INR 50,650.00 INR 33,800.00INR 76,050.00 INR 101,200.00 INR 126,350.00 INR 151,500.00 INR 134,650.00 INR 117,800.00INR 76,050.00 INR 101,200.00 INR 126,350.00 INR 151,500.00 INR 176,650.00 INR 201,800.00INR 76,050.00 INR 101,200.00 INR 126,350.00 INR 151,500.00 INR 176,650.00 INR 201,800.00INR 76,050.00 INR 101,200.00 INR 126,350.00 INR 151,500.00 INR 176,650.00 INR 201,800.00INR 76,050.00 INR 101,200.00 INR 126,350.00 INR 151,500.00 INR 176,650.00 INR 201,800.00INR 76,050.00 INR 101,200.00 INR 121,730.00 INR 142,260.00 INR 158,170.00 INR 174,080.00
Profit for a Given Manufacturing Level7000 8000 9000 10000 11000 12000
INR 313,950.00 INR 358,800.00 INR 340,650.00 INR 322,500.00 INR 304,350.00 INR 286,200.00INR 313,950.00 INR 358,800.00 INR 403,650.00 INR 448,500.00 INR 430,350.00 INR 412,200.00INR 313,950.00 INR 358,800.00 INR 403,650.00 INR 448,500.00 INR 493,350.00 INR 538,200.00INR 313,950.00 INR 358,800.00 INR 403,650.00 INR 448,500.00 INR 493,350.00 INR 538,200.00INR 313,950.00 INR 358,800.00 INR 403,650.00 INR 448,500.00 INR 493,350.00 INR 538,200.00INR 313,950.00 INR 358,800.00 INR 403,650.00 INR 448,500.00 INR 493,350.00 INR 538,200.00INR 313,950.00 INR 358,800.00 INR 396,720.00 INR 434,640.00 INR 465,630.00 INR 496,620.00
INR 390,000.00 INR 460,000.00 INR 518,450.00 INR 576,900.00 INR 623,800.00 INR 670,700.00
The distributor pays this percentage of the cost.
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Dist. PMfg. PTotal P.
Quantity
Pro
fit
(IN
R)
13000 14000 15000 16000 17000 18000INR 16,950.00 INR 100.00 -INR 16,750.00 -INR 33,600.00 -INR 50,450.00 -INR 67,300.00
INR 100,950.00 INR 84,100.00 INR 67,250.00 INR 50,400.00 INR 33,550.00 INR 16,700.00INR 184,950.00 INR 168,100.00 INR 151,250.00 INR 134,400.00 INR 117,550.00 INR 100,700.00INR 226,950.00 INR 252,100.00 INR 235,250.00 INR 218,400.00 INR 201,550.00 INR 184,700.00INR 226,950.00 INR 252,100.00 INR 277,250.00 INR 302,400.00 INR 285,550.00 INR 268,700.00INR 226,950.00 INR 252,100.00 INR 277,250.00 INR 302,400.00 INR 327,550.00 INR 352,700.00INR 178,230.00 INR 182,380.00 INR 177,290.00 INR 172,200.00 INR 159,550.00 INR 146,900.00
INR 182,380
13000 14000 15000 16000 17000 18000INR 268,050.00 INR 249,900.00 INR 231,750.00 INR 213,600.00 INR 195,450.00 INR 177,300.00INR 394,050.00 INR 375,900.00 INR 357,750.00 INR 339,600.00 INR 321,450.00 INR 303,300.00INR 520,050.00 INR 501,900.00 INR 483,750.00 INR 465,600.00 INR 447,450.00 INR 429,300.00INR 583,050.00 INR 627,900.00 INR 609,750.00 INR 591,600.00 INR 573,450.00 INR 555,300.00INR 583,050.00 INR 627,900.00 INR 672,750.00 INR 717,600.00 INR 699,450.00 INR 681,300.00INR 583,050.00 INR 627,900.00 INR 672,750.00 INR 717,600.00 INR 762,450.00 INR 807,300.00INR 509,970.00 INR 523,320.00 INR 522,810.00 INR 522,300.00 INR 510,450.00 INR 498,600.00
INR 523,320
INR 688,200.00 INR 705,700.00 INR 700,100.00 INR 694,500.00 INR 670,000.00 INR 645,500.00
INR 705,700
This is the global optimal solution in Example 4-12
These are the cost parameters:
Item PriceDistributor sells for: INR 125.00Salvage: INR 20.00Fixed Production Cost: INR 100,000.00Variable Production Cost: INR 55.00
This is the system's expected (or average) profit calculations:
Demand Probability5000 6000 7000
8000 11% INR 250,000.00 INR 320,000.00 INR 390,000.0010000 11% INR 250,000.00 INR 320,000.00 INR 390,000.0012000 28% INR 250,000.00 INR 320,000.00 INR 390,000.0014000 22% INR 250,000.00 INR 320,000.00 INR 390,000.0016000 18% INR 250,000.00 INR 320,000.00 INR 390,000.0018000 10% INR 250,000.00 INR 320,000.00 INR 390,000.00
Average Profit INR 250,000.00 INR 320,000.00 INR 390,000.00Maximum:
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Quantity
Syste
m P
rofi
t (I
NR
)
Profit for a Given Manufacturing Level8000 9000 10000 11000 12000 13000
INR 460,000.00 INR 425,000.00 INR 390,000.00 INR 355,000.00 INR 320,000.00 INR 285,000.00INR 460,000.00 INR 530,000.00 INR 600,000.00 INR 565,000.00 INR 530,000.00 INR 495,000.00INR 460,000.00 INR 530,000.00 INR 600,000.00 INR 670,000.00 INR 740,000.00 INR 705,000.00INR 460,000.00 INR 530,000.00 INR 600,000.00 INR 670,000.00 INR 740,000.00 INR 810,000.00INR 460,000.00 INR 530,000.00 INR 600,000.00 INR 670,000.00 INR 740,000.00 INR 810,000.00INR 460,000.00 INR 530,000.00 INR 600,000.00 INR 670,000.00 INR 740,000.00 INR 810,000.00INR 460,000.00 INR 518,450.00 INR 576,900.00 INR 623,800.00 INR 670,700.00 INR 688,200.00
5,000 8,000 11,000 14,000 17,000INR 0.00
INR 100,000.00
INR 200,000.00
INR 300,000.00
INR 400,000.00
INR 500,000.00
INR 600,000.00
INR 700,000.00
INR 800,000.00
Profit vs Order Quantity
Quantity
Syste
m P
rofi
t (I
NR
)
14000 15000 16000 17000 18000INR 250,000.00 INR 215,000.00 INR 180,000.00 INR 145,000.00 INR 110,000.00INR 460,000.00 INR 425,000.00 INR 390,000.00 INR 355,000.00 INR 320,000.00INR 670,000.00 INR 635,000.00 INR 600,000.00 INR 565,000.00 INR 530,000.00INR 880,000.00 INR 845,000.00 INR 810,000.00 INR 775,000.00 INR 740,000.00INR 880,000.00 INR 950,000.00 INR 1,020,000.00 INR 985,000.00 INR 950,000.00INR 880,000.00 INR 950,000.00 INR 1,020,000.00 INR 1,090,000.00 INR 1,160,000.00INR 705,700.00 INR 700,100.00 INR 694,500.00 INR 670,000.00 INR 645,500.00
INR 705,700
