# of Cuctomers Probability Mapping ( 0- Demand per Probability Mapping ( 0-

99 ) Customer 99 )

0 0.1 0-9 1 0.1 0-9

1 0.3 10-39 2 0.15 10-24
2 0.25 40-64 3 0.4 25-64
3 0.2 65-84 4 0.35 65-99
4 0.15 85-99

Inventory Level
# of Demand per Total
Week RN1 RN2 Beginning Ending
Customers Customer Demand

81 4

1 36 1 4 25 21

46 3
90 4
2 97 4 14 21 7
60 3
70 4
65 4

3 31 1 4 7 3

23 2

4 30 1 2 28 26

81 4
76 4
5 66 3 9 26 17
0 1
Order Q when inventory <= R and there is no outstanding order
Q = 25 R = 10

Costs:
Ordering = $45 per order
Holding = $1 per unit per week
Backorder = $5 per unit per week

Costs
Ordering or
Receiving Ordering Holding Backorder Total Q 25

R 10
Ordering 45
- - 21 - 21
Holding 1
Backorder 5

order 25 45 7 - 52

- - 3 - 3

received 25 - 26 - 26

- - 17 - 17