Question: Computco Ltd sells personal computers. The demand for its computers during a month follows a normal distribution, with a mean of 400 and standard deviation
Computco Ltd sells personal computers. The demand for its computers during a month follows a normal distribution, with a mean of 400 and standard deviation of 100. Each time an order is placed, costs of $600 per order and $1500 per computer are incurred. Computers are sold for $2800. If Computco does not have a computer in stock, then the customer will buy a computer from a competitor. At the end of each month, a holding cost of $10 per computer is incurred. The holding cost is based on each months ending inventory. Orders are placed at the end of each month, and arrive at the beginning of the next month. Four ordering policies are under consideration:
- Policy 1: Place an order for 900 computers whenever the end-of-month inventory is 100 or less.
- Policy 2: Place an order for 600 computers whenever the end-of-month inventory is 200 or less.
- Policy 3: Place an order for 1000 computers whenever the end-of-month inventory is 400 or less.
- Policy 4: Place an order for 1200 computers whenever the end-of-month inventory is 500 or less.
Please develop a simulation model by Excel built-in tools and run 1000 iterations of the model to determine which ordering policy maximizes Computcos expected profit for a 2-year period. To get a more accurate estimation of expected profit, you can credit Computco with a salvage value of $1500 for each computer left at the end of the 2-year period. Assume that 400 computers are in inventory at the beginning of the first month.
PLZ show me the steps by using EXCEL BUILT IN tools to solve it.
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