Higgins Plumbing and Heating maintains a stock of 30 gallon hot water heaters wh
ID: 380193 • Letter: H
Question
Higgins Plumbing and Heating maintains a stock of 30 gallon hot water heaters which they sells to home owners. Owner Jerry Higgins likes the idea of having a large supply on hand to meet customer demand, but he also recognizes that it is expensive to do. He examines hot water heater sales over the past 50 weeks, and notes the following:
a) If Higgins maintains a constant supply of 9 hot water heaters in any
given week, during which week(s) he will be out of stock during a 20-week
simulation? Use the random numbers that are provided.
b) During which week(s) additional order(s) should be placed knowing
that the order lead time is 5 weeks?
c) How many additional units will need to be ordered each time?
d) What is the total of simulated sales for the 20 week period
under consideration?
3
Hot Water Heaters Sales Per Week # of weeks this number of heaters was sold 4 6 5 5 6 9 7 12 8 8 9 7 103
Explanation / Answer
Number of sales per week=?
Heater Sales Probability Random Number Intervals
4 0.12 (6/50) 01 to 12
5 0.10 (5/50) 13 to 22
6 0.18 23 to 40
7 0.24 41 to 64
8 0.16 65 to 80
9 0.14 81 to 94
10 0.06 95 to 00
a) Week Random Number Simulated Sales
1 10 4
2 24 6
3 03 4
4 32 6
5 23 6
6 59 7
7 95 10
8 34 6
9 34 6
10 51 7
11 08 4
12 48 7
13 66 8
14 97 10
15 03 4
16 96 10
17 46 7
18 74 8
19 77 8
20 44 7
With a constant supply of 9 hot water heaters, Higgins will be out of stock in week 7, week 14 and week 16.
b) Orders should be placed on weeks 2, 9 and 11.
c) He needs to order 1 additional unit each time.
d) The total of simulated sales for the 20 week period = 135.
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