Question: Problem 3 {4 points) Let Dn denote the demand for Canon Rebel cameras at Lenox Photo on day 31. Suppose that D1. D2. . .

 Problem 3 {4 points) Let Dn denote the demand for Canon

Problem 3 {4 points) Let Dn denote the demand for Canon Rebel cameras at Lenox Photo on day 31. Suppose that D1. D2. . . . are independent and identically distributed with P{D1 = n} 0.3., moi1} n.3, P{D1=2} = 0.4, and P{D1 = m} = 0 when m > 2. Suppose that Lenox Photo uses an (s, S} inventory policy1 with s = l and S = 3. Orders may be placed at the end of each business day; they are lled before the store opens the next morning. If Lenox Photo does not have a Canon Rebel camera in stock when a customer arrives to purchase such a camera. then the customer will go next doors and purchase the camera from Quality Cameras. and so the sale is lost. Model this situation as a Markov chain. This problem will be continued on Assignment 4. The objective will be to the determine the longrun average dailji,F cost and then to consider different values of s and S and determine which set of values is more protable

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