Average daily sales of a product are 8 units. The actual number of units each day is 7, 8, or 9 with probabilities 0.3, 0.4, and 0.3 respectively. The lead time for delivery of this product averages 4 days, although the time may be 3, 4, or 5 days with probabilities 0.2, 0.6, and 0.2. The company plans to place an order when the inventory level drops to 32 units (based on average demand and lead-time). The following random numbers have been generated:
Set 1: 60, 87, 46, 63, 50, 76, 11, 04, 97, 96, 65
Set 2: 52, 78, 13, 06, 99, 98, 80, 09, 67, 89, 45
Use set 1 to generate lead-times, and use set 2 to simulate daily demand. Simulate two ordering periods and determine how often the company runs out of stock before the shipment arrives.
Assume an order quantity of 32.