Question: Reconsider Exercise except that, if the inventory level at a monthly review is zero or negative, a rush order for Q units is placed. The cost for a rush order is $120+$12Q, where $120 is the ordering cost and $12 is the cost of each item. The lead time for a rush order is given by a uniform distribution on the interval (0.10, 0.25) months.
(a) Make four independent replications for the (M, L) policy, and estimate longrun mean monthly cost with a 90% confidence interval.
(b) Using the results of part (a), estimate the total number of replications needed to estimate mean monthly cost within $5.