(i) Your company, a Distribution Centre for a branded auto-motor spares obtained its up-stream SKUs from its manufacturer for distribution to local auto workshops. The demands from local auto workshops were uncertain but historical records were compiled as shown:

(ii) Each team will be assigned a random set of demands from local auto workshops to start an inventory policy ordering simulation. The various cost components incurred by the Distribution Centre are as follows:

Carrying cost per unit per day, HC = $2.00

Ordering cost per order, RC = $35.00

Lead time for replenishment (days) Stock on hand at the beginning = 200 units

Profit per unit = $13

Estimated net loss of earnings per unsold unit due to shortages = $13

Note: Any backorders are treated as lost sales.

(iii) For the purpose of this assignment and using information given above, each team member is required to carry out the following one simulation of reorder policy over a period of 25 days to determine the following:

a. the total cost of operating each policy.

b. the total profit for the period. (Nett)

c. the cost due to shortages. (Eliminate!)

Inventory Policy 1: Order 100 units when present inventory plus any outstanding quantities on order fall below 60.

Inventory Policy 2: Order 100 units when present inventory plus any outstanding quantities on order fall below 100.

Inventory Policy 3: Order 150 units when present inventory plus any outstanding quantities on order fall below 100.

Inventory Policy 4: Order 150 units when present inventory plus any outstanding quantities on order fall below 140.

Inventory Policy 5: Order 250 units when present inventory plus any outstanding quantities on order fall below 140.

Inventory Policy 6: Order 130 units when present inventory plus any outstanding quantities on order fall below 140.