Question: Use simulation techniques to solve the following problem on inventory management: Consider the company in Task 3 planning its inventory system over the next n
Use simulation techniques to solve the following problem on inventory management:
Consider the company in Task 3 planning its inventory system over the next n months. The sizes of the demands at each
point of time,
D
(
t
)
, are IID random variables (independent of when the demands occur), and distributed uniformly
within the range [0, 50]. At the beginning of each month, the company reviews the inventor level and decides how many
items to order from its supplier. As before, if the company orders
Z
items, it incurs a cost of
K
+
iZ
, where
K
=
30
is the setup cost and
i
=
3
is the incremental cost per item ordered.
(If
Z
=
0
, no cost is incurred.) When an order is
placed, the time required for it to arrive (lead time) is 1 month.
The company uses a stationary
(
s ,S
)
policy to decide how much to order, i.e.,
Z
(
t
)=
{
S
I
(
t
)
if I
(
t
)<
s
0
if I
(
t
)
s
Where
I
(
t
)
is the inventory level at the beginning of the month
t
.
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