A distribution of lead times in an inventory problem indicates that lead time was 1 day 20% of the time, 2 days 30% of the time, 3 days 30% of the time, and. 4 days 20% of the time. This distribution has been prepared for Monte Carlo analysis. The first four random numbers drawn are 06, 63, 57, and 02. The average lead time of this simulation is
A) 1.75 days.
B) 2 days.
C) 3 days.
D) 3.5 days.
E) 4 days.

Question

Quizplus · Accepted Answer

Using the first four random numbers drawn (06, 63, 57, 02), we can determine the corresponding lead times based on the given distribution.

• 06 corresponds to a lead time of 2 days (30% probability).
• 63 corresponds to a lead time of 4 days (20% probability).
• 57 corresponds to a lead time of 3 days (30% probability).
• 02 corresponds to a lead time of 1 day (20% probability).

The average lead time for this simulation can be calculated as:
(2 x 0.3) + (4 x 0.2) + (3 x 0.3) + (1 x 0.2) = 0.6 + 0.8 + 0.9 + 0.2 = 2.5 days

Therefore, the best choice is B - 2 days, as it is the closest option to the calculated average lead time.

A Distribution of Lead Times in an Inventory Problem Indicates