Question: Mattress Heaven orders a certain brand of mattress from its supplier and sells the mattresses at its retail location. The store currently orders 400 mattresses whenever the inventory level drops to 200. The cost to hold 1 mattress in inventory for one day is $0.75. The cost to place an order with the supplier is $75, and stockout costs are $150 per mattress. Beginning inventory is 150 mattresses. The daily demand probabilities are shown in the following table:
Lead time follows a discrete uniform distribution between 2 and 5 days (both inclusive). Simulate this inventory policy for a quarter (90 days) and calculate the total quarterly cost. Also calculate the percentage of stockouts for the quarter. Replicate these calculations N times each to calculate the average values for these measures.