dolution
One of the largest selling items in J.C. Ward’s Department Store is a new model of refrigerator that is highly energy-efficient. About 40 of these refrigerators are being sold per month. It takes about a week for the store to obtain more refrigerators from a wholesaler. The demand during this time has a uniform distribution between 5 and 15. The administrative cost of placing each order is $40. For each refrigerator, the holding cost per month is $8 and the shortage cost per month is estimated to be $1.
The store’s inventory manager has decided to use the stochastic continuous-review model presented in Sec. 18.6, with a service level (measure 1) of 0.8, to determine an (R, Q) policy.
(a) Solve by hand for R and Q.
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Order Paper NowT (b) Use the corresponding Excel template to check your answer in part (a).
(c) What will be the average number of stockouts per year with this inventory policy?
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