Question: Consider the simple inventory problem for an assembly part utilized in a production facility. The daily demand D is an exponentially distributed random variable with
Consider the simple inventory problem for an assembly part utilized in a production facility. The daily demand is an exponentially distributed random variable with a mean of units per day Parts are ordered in a batch of units. The total inventory cost TC per day is given by the equation as a function of holding and ordering costs as follows:
based on a holding cost of $ unit per day and an ordering cost of $ order as seen in the equation above. It is required to determine the best order quantity, which is a decision variable. Simulate this system for consecutive days to determine average total inventory cost for the order quantities of and units and indicate the best order quantity. Use the second row of uniform random numbers table below to generate the random demand starting from as given for your you may use the same random numbers for evaluating and Use the table below.
a Determine the best order quantity based on your results. Use two digits accuracy.
tabletableTC for
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