DETERMINISTIC MATH MODELS (550.251) HOMEWORK 7 FREQUENTLY ASKED QUESTIONS

1.  PROBLEM 4: I'm having trouble finding the derivatives for part (c).

ANSWER: It may help to write the function as Y = L(1 + a*exp{-bt})^-1.  (Here
exp is the exponential function and ^ means raise to the power).  Then you can
use the chain rule.  (Let u = a*exp{-bt})

2.   PROBLEM 5: I'm having trouble finding the derivatives for part (b).

ANSWER: It may help to write the function as Y = L*exp{u}  (Here
exp is the exponential function).  Then you can use the chain rule:
dy/db = dy/du*du/db and dy/dk = dy/du*du/dk.  Let u = b*exp{-kt}

3.  PROBLEM 6: What is the annual cost of capital?

ANSWER: It's just an interest rate.  You'll need it to compute h.  For this
problem (as in the example in the text) h = i*C + storage cost.

Specifically h = .18*C + 20.  (See p.742 for the explanation of why this text
splits holding costs into two portions.  See p.745, equation 13.3 and the
text below for how the annual holding cost is computed.)

4.  What does the line "The unit cost of a Taurus, including
the delivery cost to a dealer, is $16,000." have to do with
Mustangs?  Was 'Taurus' a typo for Mustang?

ANSWER: YES! Definitely a typo.