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# Simulation

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Problem:

The appliance center sells and services several brands of major appliances. Past sales for a particular model of refrigerator have resulted in the following distribution for demand:

Demand / week Probability
0 .2
1 .4
2 .2
3 .15
4 .05

The lead time, in weeks, is described by the following distribution

1 .15
2 .35
3 .5
the company has decided to order 10 units each time an order is placed. The holding cost is \$1 per unit held at the end of each week. The stockout cost is \$40 per week. The reorder point is when there is 2 units at the end of the week.

Simulate 10 weeks of operation assuming that there are 5 units in stock at the beginning of the simulation.

Determine weekly stockout and holding costs.

Formatted in Excel

Text:
Quantitative Analysis for Management, Render, Stair, and Hanna.11th Edition, Pearson Prentice-Hall, 2012. ISBN: 9780132149112.

problem 14-21
(page 567).