2 hayes electronics in problem 1 assumed with certainty that the order
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2. Hayes Electronics in Problem 1
assumed with certainty that the ordering cost is $450 per
order and the inventory carrying cost is $170 per unit per year. However, the inventory model
parameters are frequently only estimates that are subject to some degree of uncertainty.
Consider four cases of variation in the model parameters: (a) Both ordering cost and carrying
cost are 10% less than originally estimated, (b) both ordering cost and carrying cost are 10%
higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower
than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher
than originally estimated. Determine the optimal order quantity and total inventory cost for each
of the four cases. Prepare a table with values from all four cases and compare the sensitivity of
the model solution to changes in parameter values.