The Demand for Refrigerators at an Appliance Store Adheres to the Following

Essay

The demand for refrigerators at an appliance store adheres to the following probability distribution: The store orders 4 refrigerators per day to have in stock to meet demand. They are trying to maintain low inventory levels. The holding cost is $5/unit/day. The ordering cost is $20 per order. The lost sale cost is $10/unit. A simulation is to be developed to estimate the average daily inventory cost over 5 days. The table below shows the random numbers to be used for refrigerator demand and lead time on orders: Assuming that beginning inventory is equal to 5 with no prior orders in transit, what is the overall average daily cost of inventory for the 5 days?