Question

In: Operations Management

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at...

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at its retail location. The store currently orders 40 mattresses whenever the inventory level drops to 20. The cost to hold 1 mattress in inventory for one day is $0.75. The cost cost to place an order with the supplier is $80, and inventory is 30 mattresses. The daily demand probabilities are shown in the following table:

Daily Demand Probability

2 0.08

3 0.14

4 0.20

5 0.26

6 0.22

7 0.10

Lead time is decrete uniformly distributed between two and five days (both inclusive). Simulate this inventory policy for a quarter (90 days) and calculate the total quarterly cost. Also calculate the percentage of stockouts for the quarter. Replicate these calculations N times each to calculate the average values for these measures.

Solutions

Expert Solution

Use the following format for simulation

After being done with the above setup for simulation, run a data table, for N(=1000, 2000,...) times to replicate the total quarterly costs and the % of stockout instances.

My result is:

Average total quarterly cost = $2,958 and Average % of stockout = 0%

keosha answered 1 year ago
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