Directions: Carry out all calculations in the spreadsheet template for this assignment. A local garden retail store purchases lawnmowers directly from a manufacturer for $200 each and sells them to consumers for $450. All lawnmowers not sold at regular price by September 1 are sold at a discounted selling price of $125. On average, the garden retailer sells 20 lawnmower each season, with standard deviation = 12 mowers. A stock clerk working there part time is currently taking an Analytics course, and he found that a Gamma distribution best describes demand for this particular lawnmower. The retailer currently orders 20 mowers at the beginning of each season.

1. Apply the Monte-Carlo simulation methodology with R = 10 replications of length D = 20, to estimate the (a) Service level of the current ordering policy. (b) Expected profit of the current ordering policy.

Hint: The Gamma distribution has two parameters, (the shape parameter) and (the scale parameter).

It can be shown that: = ^2/ ^2

= ^2/ .

2. Can you recommend a better ordering policy? Use Monte-Carlo simulation to Justify your answer and explain why your recommended policy is better.

3.Apply the Monte-Carlo simulation approach to estimate the expected cost of the current and recommended order quantity. Recall the expected cost is as follows:

Ec = cost of units overage + cost of units short