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Higgins Plumbing and Heating maintains an inventory of 30-gallon water heaters that it sells to homeowners and installs for them. Owner Jerry Higgins likes the idea of having a large supply on hand to meet customer demand, but he also recognizes that it is potentially costly to do so. He examines water heater sales over the past 50 weeks and notes the following: Higgins Plumbing and Heating maintains an inventor For the questions below, use the Random Number Table (in the Exam 3 folder), reading down the 4th column of the table (4th column from the left). For each item below, please show your work and/or explain your reasoning to receive full credit.
a). Simulate the demand for water heaters for a period of 5 weeks. If Higgins maintains a constant supply of 8 water heaters in any given week, how many times will he be out of stock during this 5-week simulation?
b). What is the average water heater demand per week (including stockouts) over the simulated 5-week period?
c). Compute the expected number of units sold per week using the expected value formula. Why is this different than the number computed above?
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