An (s, S) Inventory Simulation (Model 5-4)

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An (s, S) Inventory Simulation (Model 5-4)

• Single-item (widgets), managed by (s, S) Policy
• s 20, S 40, Initial Inventory 60.
• Starting Net Inventory of day t, I(t), is
  reviewed
• If I(t) lt s, place an order to bring I(t) up to S
• An order incurs a 32 fixed cost and a 3/unit
  variable cost
• Order lead time (days) is uniformly distributed
  on (0.5,1)
• Demand is generated from arriving customers
• Customer inter-arrival time is Exp(0.1) days.
• A customer demands 1, 2, 3, or 4 widgets w.p.
  0.167, 0.333, 0.333, 0.167.
• Excess demand is backlogged.
• Holding and shortage costs are based on I(t)
• If I(t) gt 0, a holding cost 1?I(t) is charged
• If I(t) lt 0, a shortage cost -5?I(t) is charged