In Example 13.3, we used SolverTable to show what happens when the unit shortage cost varies. As the table indicates, the company orders more and allows more backlogging as the unit shortage cost...

In Example 13.3, we used SolverTable to show what happens when the unit shortage cost varies. As the table indicates, the company orders more and allows more backlogging as the unit shortage cost decreases. Redo the SolverTable, this time trying even smaller unit shortage costs. Explain what happens when the unit shortage cost is really small. Do you think a company would ever use a really small shortage cost?

Why or why not? Then redo the SolverTable again, this time trying even larger unit shortage costs. How do the results in this case compare to the results from the basic EOQ model with no shortages allowed?

Example 13.3