An average of one month for a replacement item to arrive

Reference no: EM131106281

A company's warehouse can store up to four units of a good. Each month, an average of 10 orders for the good are received. The times between the receipts of successive orders are exponentially distributed. When an item is used to fill an order, a replacement item is immediately ordered, and it takes an average of one month for a replacement item to arrive. If no items are on hand when an order is received, the order is lost. Use simulation to estimate the fraction of all orders that will be lost due to shortage.

Reference no: EM131106281

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