(Implementing EOQD Approximation) Consider an instance of the EOQD with

K = 35, h = 4, p = 22, d = 30, λ = 1, and µ = 12.

a) Find Q∗

for this instance using optimization software of your choice. Report the

expected cost, g(Q∗

).

b) Consider the following heuristic for the EOQD:

1. Set Q equal to the EOQ.

2. Calculate ψ using the current value of Q.

3. Find Q using (9.82) from Problem 9.7, setting ψˆ equal to the current ψ from

step 2.

4. If Q has changed more than ǫ since the previous iteration (for fixed ǫ > 0),

then go to 2; otherwise, stop.

Using this heuristic and any software package you like, find a near-optimal Q

using ǫ = 10−3

. Report the Q you found, its cost g(Q), and the percentage

difference between g(Q) and g(Q∗

) from part (a).

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