Use probability determine the expected value of sales, Supply Chain Management

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Aerial Products maintains a safety stock of 5 airframes in any given week. The owner likes to have the supply as a just in case buffer.  Given the weekly demand in the data table in the accompanying spreadsheet:

A: Set up a simulation model that simulates sales over the number of weeks indicated and compute:

  • Average weekly sales
  • Number of weeks of stockouts over the two year period.

Replicate the model 200 times, using Data Table, to determine average weekly sales and the probability of more than 20 weeks with stockouts over a 2 year period.

B: Use the probability distribution for sales to determine the expected value of sales. Explain any differences between this value and the value from Part A.

 

 


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