Question: solve all parts A store faces a random weekly demand for a single item it sells. Each week customers are equally likely to demand 0,

solve all parts

solve all parts A store faces a random weekly demand for a

A store faces a random weekly demand for a single item it sells. Each week customers are equally likely to demand 0, 1 or 2 items. Backordering is not allowed and any demand that can not be met from stock is lost. Two ordering policies are under consideration: Policy 1: If ending inventory in a week is 2 units or less order enough to bring next week's beginning inventory to 3 units. Policy 2: If ending inventory in a week is 1 units or less order enough to bring next week's beginning to inventory to 2 units. The only relevant costs incurred are as follows: a) It costs $300 to place an order, b) it costs $100 to hold an item for a week. 1. Construct the transition probability matrix for both policies (define the state you use) 2. Find the steady state probabilities for both policies. 3. Which policy has a lower expected weekly cost

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