Use simulation to estimate the average annual cost

Reference no: EM131106557

Lowland Appliance replenishes its stock of 52-inch flat-screen TVs three times a year. Each order takes 1/9 of a year to arrive. Annual demand for these TVs follows a normal distribution with a mean of 990 and a standard deviation of 40. Assume that the cost of holding a TV in inventory for a year is $100. Assume that Lowland begins with 500 of these TVs in inventory, the cost of a shortage is $150, and the cost of placing an order is $500.

a. Suppose that whenever inventory is reviewed, and the inventory level is I, an order for 480I of these TVs is placed. Use simulation to estimate the average annual cost of this policy. Such a policy is called an order-up policy.

b. Use simulation to estimate the average annual cost for order-up policies when Lowland orders up to 200, 400, 600, and 800 of these TVs.

Reference no: EM131106557

Questions Cloud

Each minute a customer spends waiting for a pizza costs : Based on Ignall and Kolesar (1972). Dominic's Pizza Parlor receives 30 calls per hour for delivery of pizza. It costs Dominic's $10 to send out a truck to deliver pizzas. Each minute a customer spends waiting for a pizza costs the pizza parlor an ..

Do unions engage in ethical behavior please explain : Do unions engage in ethical behavior? Please explain. Provide specific examples. Historically, what factors precipitated the formation of unions? Please explain. Provide specific examples.

Prepare the journal entries for green day corporation : Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.

Computco sells high-end computer workstations : Computco sells high-end computer workstations. The demand for its workstations during a month follows a normal distribution, with a mean of 400 and standard deviation of 100.

Use simulation to estimate the average annual cost : Lowland Appliance replenishes its stock of 52-inch flat-screen TVs three times a year. Each order takes 1/9 of a year to arrive. Annual demand for these TVs follows a normal distribution with a mean of 990 and a standard deviation of 40.

Prepare the april 20 and june 1 entries for graves : Graves Mining Company declared, on April 20, a dividend of $500,000 payable on June 1. Of this amount, $125,000 is a return of capital. Prepare the April 20 and June 1 entries for Graves.

Calculate nwc''s free cash flow for 2009. : Based on the final forecast, calculate NWC's free cash flow for 2009. How does this FCF differ from the FCF forecasted by NWC's initial "business as usual" forecast?

Which equals their market value : Cole Inc. owns shares of Marlin Corporation stock classified as available-for-sale securities. At December 31, 2010, the available-for-sale securities were carried in Cole's accounting records at their cost of $875,000, which equals their market valu..

How does nwc compare with the average firm in its industry : How does NWC compare with the average firm in its industry, and is the company's financial position expected to improve during the coming year? Explain.

User Account

All Pages