In the sheet titled Section 3 of the excel file, a model was constructed which simulates the

queuing system inside the retailer operation (similar to the model featured in Workshop 5).

In this sheet, stochastic demand upper and lower bounds need to be inserted for the

model to simulate inventory consumption as customers are served. The questions in this

section require use of your responses in Section 1, Question 1 a-e, specifically, the

forecasted values for the 101st time period. From these forecasted values, use the

maximum and minimum forecast values generated in Section 1, Question 1 a-e. Insert the

minimum forecasted value in cells C6 and the maximum forecasted value in C7 of Section

3 sheet to populate customer demand. Similarly, the questions below will require you to

refer to your responses for question 2 a in Section 2. The expected delivered order

quantity from these calculations in Section 2 should be inserted in cell D6 in the sheet

titled Section 3 of the excel file.

1. What is the probability of a stockout in the simulated retailer operation?

(worth 5 marks)

2. Given this probability, what would be the best course of action to prevent any

chance of stockout?

(worth 5 marks)

3. Consider two alternative scenarios, one where the cost of stockout is negligible, and

an alternative scenario where the cost of stockout is very large. Discuss how the

decisions about supplier selection and order quantity would be influenced across

both scenarios. (worth 15 marks)

4. Consider how Sections 1, 2, and 3 provide information about how the supply chain

operates, provide an overall analysis of the supply chain and what would be the implications of a sudden increase or decrease in future demand.