Question: Estimate, by simulation, the average number of lost sales per week for an inventory system that functions as follows: ·
(a) Whenever the inventory level falls to or below 10 units, an order is placed. Only one order can be outstanding at a time.
(b) The size of each order is equal to 20 l, where l is the inventory level when the order is placed.
(c) If a demand occurs during a period when the inventory level is zero, the sale is lost.
(d) Daily demand is normally distributed, with a mean of 5 units and a standard deviation of 1.5 umts. (Round off demands to the closest integer during the simulation, and, if a negative value results, give it a demand of zero.)
(e) Lead time is distributed uniformly between zero and 5 days-integers only.
(f) The simulation will start with 18 units in inventory.
(g) For simplicity, assume that orders are placed at the close of the business day and received after the lead time has occurred. Thus, if lead time is one day, the order is available for distribution on the morning of the second day of business following the placement of the order.
(h) Let the simulation run for 5 weeks.