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

question 83

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 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 10 weeks worth of sales. How many sales are lost?
$$\begin{array} { | c | c | } \hline \text { Weekly sales } & \text { Probability } \\\hline 3 & .20 \\\hline 4 & .30 \\\hline 5 & .20 \\\hline 6 & .20 \\\hline\end{array}$$
Random numbers for sales: 37, 60, 79, 21, 85, 71, 48, 39, 31, 35

Grasp why public goods lead to market failure when provided through the private market.

Identify examples of public goods and common resources.

Understand the role of government in providing public goods and addressing externality issues.

Analyze the relationship between marginal cost and marginal social benefit in the context of public goods.

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Definitions:

Hydrograph

a graph showing the rate of flow (discharge) versus time past a specific point in a stream, river, or other channel.

Snowmelt

The runoff produced by melting snow.

Hundred-year Flood

is a term used to describe a flood event that has a 1% chance of occurring in any given year, used as a standard metric in flood risk assessment.

Probability

The statistical description of the likelihood that an event will occur.