Simkin’s Hardware simulated an inventory-ordering policy for Ace electric drills that involved an order quantity of 10 drills, with a reorder point of 5. This first attempt to develop a cost- effective ordering strategy was illustrated in Table F.10 of Example F3 (on p. 826). The brief simulation resulted in a total daily inventory cost of $6.65 in Example F4.
Simkin would flow like to compare this strategy to one in which he orders 12 drills, with a reorder point of 6. Conduct a 10-day simulation (using random numbers from the right hand column of Table F.4, starting with 07, and using a beginning inventory = 12). Discuss the cost implications.