Question: 18. A retail store uses a ROP inventory system for a popular MP3 player that orders 40 units whenever the ROP of 25 is reached.

18. A retail store uses a ROP inventory system for a popular MP3 player that orders 40 units whenever the ROP of 25 is reached. The delivery time from the supplier has a mean of five days, with a standard deviation of 0.25 days. The time between customer demands is exponential with a mean of two hours. The store is open 10 hours per day, seven days a week. Suppose that the order cost is $50 per order, and the cost of holding items in inventory is $0.40 per day. The store manager wants to minimize the total supply chain costs.

Develop a SimQuick model for this supply chain, run the simulation for a two-month period, and experiment with the model to find an order quantity that minimizes total cost (keeping the ROP fixed at 25).

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