Sam's Hardware Store Has an Order Policy of Ordering 12

question 29

Essay

Sam's hardware store has an order policy of ordering 12 gallons of a specific primer whenever 7 gallons 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 10 gallons and 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 10 weeks' worth of sales. How many sales are lost?
Random numbers for sales: 37, 60, 79, 21, 85, 71, 48, 39, 31, 35

---

Definitions:

Administrative Expenses

Costs related to the general operation of a company that are not directly tied to a specific business activity, including salaries of office staff, depreciation of office equipment, and utilities.

Planning Budget

A forecast of income and expenditures over a specific future period, typically used for managing financial resources and setting financial goals.

Client-Visits

Instances where a company's representatives meet with clients or potential clients, often to discuss business, maintain relationships, or sell products and services.

Net Operating Income

The profit generated from a company's operational activities, excluding non-operational revenues and expenses.