Sam's Hardware Store Has an Order Policy of Ordering 11

question 91

Essay

Sam's hardware store has an order policy of ordering 11 liters of a specific primer whenever 5 liters are on hand (unless there's already an ordered delivery due). The store would like to see how well their policy works. Assume that beginning inventory in period 1 is 12 units, that orders are placed at the end of the week to be received one week later. (In other words, if an order is placed at the end of week one, it is available at the beginning of week 3.) Assume that if inventory is not on hand, it will result in a lost sale. The weekly demand distribution obtained from past sales is found in the table below. Also, use the random numbers that are provided and simulate 5 weeks worth of sales. How many sales are lost?
$$\begin{array} { | c | c | } \hline \text { Weekly sales } & \text { Probability } \\\hline 3 & .25 \\\hline 4 & .25 \\\hline 5 & .30 \\\hline 6 & .20 \\\hline\end{array}$$ Random numbers for sales: 87, 64, 79, 21, 85

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Definitions:

Relationship Between Variables

The relationship between variables refers to how changes in one variable are associated with changes in another through correlation or causation.

Significance Level

The significance level, often denoted by alpha (α), is the threshold chosen by the researcher to determine the statistical significance of an outcome; it's the probability of rejecting the null hypothesis when it is true.

Highly Significant

A term used in statistical analysis to denote results that vastly exceed the threshold for statistical significance, often suggesting a strong effect or association.

p < .001

p < .001 indicates that the probability of the observed data, or something more extreme, assuming the null hypothesis is true, is less than 0.1%, which is considered highly statistically significant.