cognella ACTIVE LEARNING End of Lesson 4.6: Gordon's Skis-Fixed Order Interval Inventory Problem Gordon's sells skis during the season and is trying to determine what their inventory policy should be for this season. Their accountant has estimated that their carrying (holding) cost is $2/week per pair of skis when computed on the basis of the average inventory held during the week (e.g., if eight pairs are in inventory at the beginning of the week and three pairs are left over at the end of the week, then their holding costs are $2*(8+3)/2 = $11. Stock-out costs are $20 for every item not available when demanded, and customers are not willing to backorder. A review of the sales records reveals the following demand distribution: demand 0 probability 0.1 1 0.20 2 0.30 3 4 0.24 0.16 A review of the ski supplier's delivery patterns reveals the following probability distribution for lead times: Delivery time (wks) probability 1 0.4 2 0.4 3 0.2 Mr. Gordon was sick and tired of being dependent on the vagaries of random delivery times. Discussions with his supplier revealed that the supplier had a truck coming to Eastern North Carolina every two weeks. For a fixed charge of $30, the supplier was willing to add Gordon's skis to the route. Mr. Gordon could place an order on the Friday afternoon before the truck was scheduled to come, and the truck would deliver that order the following Monday morning, prior to the shop opening. Since Gordon's would be added to the route, they would have to pay the $30 even if they did not place an order. Mr. Gordon was intrigued by this opportunity and enlisted your assistance in determining whether this type of inventory management would save him money. If he went to this system, he planned to place an order for however many skis he needed to fill up his storage space, which could hold a maximum of eight pairs. So, for example, if by ordering time he had three pairs of skis left in stock, he would place an order for five. Of course, depending on demand during the time he was waiting on the order by the time the order arrived it may no cognella | ACTIVE LEARNING within $1 of the true value for any given inventory policy (order quantity and order level). Using the sample size obtained, use Solver to determine Gordon's optimal inventory policy (the order quantity and order interval that minimizes total inventory cost). Gordon's has an initial inventory of eight skis in stock, and they will place their first order at the end of week 2, with the first delivery at the beginning of week 3.