A distribution of lead times in an inventory problem indicates that lead time was 1 day 20 percent of the time, 2 days 30 percent of the time, 3 days 30 percent of the time, and 4 days 20 percent of the time. This distribution has been prepared for Monte Carlo analysis. The first four random numbers drawn are 06, 63, 47, and 02. What is the average lead time of this simulation?
A) 1.75 days
B) 2 days
C) 3 days
D) 3.5 days
E) 8 days

Question

Quizplus · Accepted Answer

The average lead time is calculated by mapping the random numbers to the lead times based on their probabilities. For 06 and 02 (both ≤ 20), the lead time is 1 day. For 63 and 47 (both > 50 and ≤ 80), the lead time is 3 days. Thus, the total lead time for the four simulations is (1+1+3+3) = 8 days, and the average is 8/4 = 2 days. However, the correct calculation should result in an average that matches one of the options provided, and the explanation mistakenly concludes with 2 days, which does not align with the selected choice A. The correct interpretation of the simulation results should indeed lead to the correct average lead time based on the given options and the methodology for mapping random numbers to lead times.

A Distribution of Lead Times in an Inventory Problem Indicates