Supply Chain Network Planning for Humanitarian Operations During Seasonal Disasters Page: 62
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maintaining the pivot at p=24 and = 200. Knowing that the spot market price is higher, RA
decision maker orders more to reduce the under ordering cost.
Observation 5.2: A RA decision maker orders less than the risk-neutral decision maker if
c2 1+ and vice versa.
The proof is straight forward. When c2 is replaced by P7 in RA optimal order size, RA
optimal order size becomes equal to RN order size. For various values of c2, Figure 5-9 depicts
the order sizes of RA and RN. Note that when P+= 15.5, the order sizes of RA and RN
becomes equal and coincide at the mean of the distribution. Since c2 of the problem is 16 (i.e.,
above 15.5), RA order size is lower than the RN one. For any c2 above 15.5, the observation 5.2
220 \ RN
10 12 14 16 18 20 22
c2 n dollars
Figure 5-9 Impact of Cost c2 on RA and RN Order Sizes
Observation 5.3: A RA decision maker orders more than the risk-neutral decision maker if
v 2 c2 - p and vice versa.
The proof is straight forward. When v is replaced by 2 c2 - p in RA optimal order size,
RA optimal order size becomes equal to RN order size. Figure 5-10 shows the RA and RN order
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Ponnaiyan, Subramaniam. Supply Chain Network Planning for Humanitarian Operations During Seasonal Disasters, dissertation, May 2013; Denton, Texas. (https://digital.library.unt.edu/ark:/67531/metadc271880/m1/70/: accessed June 26, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; .