Estimating Error; Sensitivity to ChangeThe Wilson lot size
Chapter 14, Problem 54E(choose chapter or problem)
Problem 54E
Estimating Error; Sensitivity to Change
The Wilson lot size formula The Wilson lot size formula in economics says that the most economical quantity Q of goods (radios, shoes, brooms, whatever) for a store to order is given by the formula where K is the cost of placing the order, M is the number of items sold per week, and h is the weekly holding cost for each item (cost of space, utilities, security, and so on). To which of the variables K, M, and h is Q most sensitive near the point (K0, M0, h0) = (2, 20, 0.05)? Give reasons for your answer
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