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  3. furniture depot orders a certain brand of mattress

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at...

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General Management

Furniture Depot orders a certain brand of mattress from itssupplier and sells the mattresses at its retail location. The storecurrently orders 40 mattresses whenever the inventory level dropsto 20. The cost to hold 1 mattress in inventory for one day is$0.75. The cost cost to place an order with the supplier is $80,and inventory is 30 mattresses. The daily demand probabilities areshown in the following table:

Daily Demand Probability

2 0.08

3 0.14

4 0.20

5 0.26

6 0.22

7 0.10

Lead time is decrete uniformly distributed between two and fivedays (both inclusive). Simulate this inventory policy for a quarter(90 days) and calculate the total quarterly cost. Also calculatethe percentage of stockouts for the quarter. Replicate thesecalculations N times each to calculate the average values for thesemeasures.

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