Question
Average daily sales of a product are 10 units. The actual number of units each day is 9, 10, or 11 with frequencies of 75,
Average daily sales of a product are 10 units. The actual number of units each day is 9, 10, or 11 with frequencies of 75, 90 and 85 respectively during the last 250 days. The lead time for delivery of this product averages 4 days, although the time may be 3, 4, or 5 days with frequencies of 25, 60 and 20 respectively as observed in 105 recent orders. The company plans to place an order when the inventory level drops to 25 units (based on average demand and lead-time). The beginning inventory is 35. The following random numbers have been generated: Set 1: 52, 78, 13, 06, 99, 98, 80, 09, 67, 89 Set 2: 60, 87, 46, 63, 50, 76, 11, 04, 97, 96 Use Set 1 to generate lead-times and use Set 2 to simulate daily demand for a 10 days period. Determine how often the company runs out of stock before the shipment arrives. Assume an order quantity of 40 (Q = 40). Reorder point is 25 units (ROP = 25). Beginning Inventory = 35 units.
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