As a distributor for PC Tech, you sell XP computers to retailers. The monthly demand for XP computers is Poisson with a mean of 400. The units cost you $1,500 each, and you sell them for $2,800. You can carry inventory from month-to-month, and estimate your inventory holding cost as $10 per unit left in inventory at the end of a month. Every time you order from PC Tech, there is a fixed cost of $600, plus the $1,500 per unit cost of the products ordered. You want to simulate a 24-month period, at the outset of which you have 700 units in stock. For every unit in stock at the end of this period, you assess a "salvage" credit of $1,500. You are considering ordering policies of the following form: if the ending inventory for a given month is less than or equal to some "threshold" value R, immediately order another Q units. For simplicity, assume that these units become available immediately at the beginning of the next month. Your boss asks you to evaluate the following possible combinations of R and Q. Which one seems to yield the highest expected profit over the 24-month period? Every time you order, there is a fixed cost of $600, plus the $1,500 per unit cost of the products ordered. For each policy, you also wish to estimate the probability of having a "stockout" at some time during the 24-month period. A "stockout" means that there is insufficient stock to meet customer demand. Policy 1 2 3 4 5 6 7 R 400 400 400 500 500 600 600 Q 800 1000 1200 1000 1200 1000 1200 Simulation approach What is the decision variable? Range of values? What are the input random variables? Distributions? What is the output random variable? Metrics of interest?