SECTION B: CASE SCENARIOS TO BE SOLVED ON MONTE CARLO SIMULATION

Edward, owner, and manager of General Hardware, wants to find a good, low$-$cost inventory policy for one product: The Ace model electric drill. Due to the complexity of this situation, he has decided to use simulation to help with this.

Daily demand for the Ace model drill is relatively low but subject to some variability. Over the past $300$ days, Edward has observed the sales shown in the table. When Edward places an order to replenish his inventory of Ace drills, there is a delivery lag of one to three days. The first inventory policy that General Hardware wants to simulate is an order quantity of $10$ with a reorder point of $5($if the lead time is one day, by the way, the order will not arrive the next morning but at the beginning of the following working day$).$

$\backslash$table$[[\backslash$table$[[$Demand for Ace$],[$Drill$]],$Frequency $($days$)],[0,15],[1,30],[2,60],[3,120],[4,45],[5,30]]$

$\backslash$table$[[$Lead Time,Frequency $($order$)],[1,10],[2,25],[3,15]]$

$1\mathrm{.}1$ Simulate for $10$ days period assuming that the beginning inventory is $10$ units on day $1.$ Select random numbers from the second column of the random number table. The selected ramdom numners from the table are: $6,63,57,2,94,52,69,33,32,30$

$1\mathrm{.}2$ Simulate the inventory system of Ace Drill and determine the following:

$1\mathrm{.}2\mathrm{.}1$ Average ending inventory

$1\mathrm{.}2\mathrm{.}2$ Average lost sales

$1\mathrm{.}2\mathrm{.}3$ Average number of orders