One of the examples dealt with determining the optimal re-order point for a computer monitor sold by Millennium Computer Corp (MCC). Suppose that it costs MCC $0.30 per day in holding costs for each monitor in beginning inventory, and it costs $20 to place an order. Each monitor sold generates a profit of $45, and each lost sale results in an opportunity cost of $65 (including the lost profit of $45 and $20 in lost goodwill). Modify the spreadsheet to determine the reorder point and order quantity that maximize the average monthly profit associated with this monitor. Be sure to only model the first 25 days using 1000 trials. Millennium Computer Corp.
Shipping Time Quantity Demanded
Days Prob Units Prob
3 0.20 0 0.01
4 0.60 1 0.02
5 0.20 2 0.04
Total 1.00 3 0.06
4 0.09
5 0.14
6 0.18
7 0.22
8 0.16
9 0.06
10 0.02
Total 1.00