Refer to Example D.2. Ryan Smith, the Orion Electronics store manager, would like to try an alternative inventory policy of ordering 15 microwave units whenever the inventory level drops to 5. Also, any unmet customer demand will be backordered and the backorders will be filled immediately when there is inventory in stock. The ordering cost of placing an order for the microwave oven is $20/order, the holding cost per oven per day is $5, and the cost of each backorder per day per oven is $15:

1. Using the same data for beginning inventory, daily demand, and lead times given in Example D.2, conduct a 20-day inventory simulation.

2. Compute the total inventory cost for this inventory simulation.

Data from example D.2

TABLE D.7: Demand and Lead Time Frequency Distribution for Microwave Ovens DEMAND FOR FREQUENCY OF LEAD TIME FOR FREQUENCY OF OCCURRENCE (IN DAYS) MICROWAVE OVENS OCCURRENCE (IN DAYS) MICROWAVE OVENS 20 20 40 2 50 70 30 3 60 4 20 10 Total = 200 Total = 100