A book store wishes to carry a particular book in stock. The demand of book is not certain and there is lead time of 2 days for stock replinishment. The probabilities of the demand are Demand : 0 1 2 3 4 Probability: 0.05 0.10 0.3 0.45 0.1 Each time an order is placed, the store incurs an ordering cost of Rs. 10 per order. The store also incurs a carrying cost of Re.0.50 per book per day. The inventory cost is calculated on the basis of stock at the end of each day. The manager of the book store wishes to compare two options for his inventory decision. A: Order 5 books when the present inventory plus any outstanding orders falls below 8 books. B: Order 8 books when the present inventory plus any outstanding orders falls below 8 books. Currently (beginning of 1 st day) the store has a stock of 8 books plus 6 books ordered two days of age and are expected to arrive the next day. Carryout simulation run for 10 days to recommend an appropriate option. Use the following random numbers in sequence : 89,34,78,63,61,81,39,16,13 and 73.

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2016-04-28T19:52:29+05:30