Harry Coveleskie is the inventory manager for Weight Watcher's Clinic. Demand for Diet 15 has shown wide fluctuations. Harry wants to determine the expected demand for Diet 15 during a reorder period i.e. the time lapse from when stock is reordered until it is received. Harry must know how far in advance he should reorder before the stock level is reduced to 0. On the basis of historical data of lead time and demand Harry realizes that these are random variables.
Lead time Probability Demand per day probability
1 0.5 1 0.1
2 0.3 2 0.3
3 0.2 3 0.4
4 0.2
a. Simulate this problem using the Monte Carlo process. Show the demand during lead time (DDLT) for 30 reorders and determine the expected demand during lead time.