Question: Considering the following demand probability distribution in an inventory problem and given that the initial stock situation is 1 product under the (s,S) s=0 and

Considering the following demand probability distribution in an inventory problem and given that the initial stock situation is 1 product under the (s,S) s=0 and S=2 stock policy;

P{D=0}=1/4, P{D=1}=1/4, P{D=2}=1/2, P{D>=3}=0

a) Find a step transition matrix.

b) Find the first transition times from all i's to j's.

c) Calculate the steady-state probabilities.

d) The holding cost function for the products left in the hands of the store over the weekend Calculate the long-run holding cost if C(0)=$0, C(1)=$2 C(2)=$8.

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