A Distribution of Lead Times in an Inventory Problem Indicates

question 2

Multiple Choice

A distribution of lead times in an inventory problem indicates that lead time was 1 day 20% of the time, 2 days 30% of the time, 3 days 30% of the time, and. 4 days 20% of the time. This distribution has been prepared for Monte Carlo analysis. The first four random numbers drawn are 06, 63, 57, and 02. The average lead time of this simulation is

• A) 1.75 days.
• B) 2 days.
• C) 3 days.
• D) 3.5 days.
• E) 4 days.

---

Definitions:

Payoffs

The outcomes or rewards received as a result of a decision or action, often evaluated in decision-making processes to anticipate different scenarios' benefits or drawbacks.

Clearance Priced

Reduced pricing strategies applied to products or inventory intended to be sold quickly, often to make room for new stock or to eliminate excess.

Demand Patterns

The trends or tendencies in consumer demand over time, which can vary due to seasonality, market changes, or other factors.

Expected Value

A calculated average of all possible values for a random variable, weighted by their respective probabilities, often used in statistics, economics, and finance.