Daily demand for Webcor barbeques at Shaper Idea has the following probabilities distribution:
Demand Probability
0 0.05
1 0.37
2 0.3
3 0.2
4 0.08
Orders are placed at the end of the day, and lead-time (in days) has the following probability distribution.
Lead Time Probability
1 0.05
2 0.5
3 0.35
4 0.1
For example, an order placed on day 4 with a lead-time of 2 days will be delivered at the beginning of day 7. Sharper Idea currently has an inventory of 10 Webcor barbeques. Order costs are approximately $50 per order, and inventory holding costs are estimated to be $2 per barbeque per day. The company suffers a goodwill cost of $30 for each barbeque demanded when it is out of
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