# solution

Consider the Mattress Heaven problem described in Problem 10-25. (a) Mattress Heaven would like to evaluate ordering 350, 400, 450, and 500 mattresses when the reorder point of 200 is reached. Based on the average total quarterly cost, which order quantity would you recommend? (b) Mattress Heaven would like to evaluate reorder points of 150, 200, 250, and 300 mattresses, with an order quantity of 400 mattresses. Based on the average total quarterly cost, which reorder point would you recommend

Problem 10-25

Mattress Heaven orders a certain brand of mattress from its supplier and sells the mattresses at its retail location. The store currently orders 400 mattresses whenever the inventory level drops to 200. The cost to hold 1 mattress in inventory for one day is \$0.75. The cost to place an order with the supplier is \$75, and stockout costs are \$150 per mattress. Beginning inventory is 150 mattresses. The daily demand probabilities are shown in the following table:

Lead time follows a discrete uniform distribution between 2 and 5 days (both inclusive). Simulate this inventory policy for a quarter (90 days) and calculate the total quarterly cost. Also calculate the percentage of stockouts for the quarter. Replicate these calculations N times each to calculate the average values for these measures.

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