Problem:

• Suppose that the maximum inventory level M, is 11 units and the review period N, is 5 days. The problem is to estimate by simulation the average ending units in inventory and the number of days when a shortage condition occurs.

• The distribution of the number of units demanded per day is shown in Table-1.

• Random digit for demand: 24, 35, 65, 81, 54, 03, 87, 27, 73, 70, 47, 45, 48, 17, 09, 42, 87, 26, 36, 40, 07, 63, 19, 88, 94.

• In this example, lead time is a random variable as shown as in Table-2.

• Random digit for lead time: 5, 10, 3, 4, 8.

• Assume that orders are placed at the close of the business and are receive for inventory at the beginning of business as determined by the lead time.

• For the purpose of this example only five cycle will be shown.

• The simulation has been started with the inventory level at 3 and an order of 8 units scheduled to arrive in 2 days’ time.