Description Sewing Worth, Inc. (SWI) would like to develop an inventory policy that will minimize the total cost associated with the company’s inventory of sewing machines. The type of inventory policy they prefer involves a fixed Reorder Point and Order Quantity. The reorder point is the level of inventory at which an order is sent to the supplier. The order quantity is the amount ordered each time. These are decisions, but once selected, they will remain constant for the entire year (are not changed on a week-by-week basis). The current inventory policy is a Reorder Point of 1 unit, and an Order Quantity of 5 units. At this time, the company has a beginning inventory of 5 units. SWI faces an uncertain demand for these sewing machines each week, as shown in the following table: Demand Per Week 0 1 2 3 4 5 Probability 20% 55% 10% 5% 5% 5% Some relevant cost data is known. It costs $1 per week to hold each sewing machine in inventory and it costs $100 to place an order, regardless of the order size. When an order is placed it takes two weeks (assume the order is placed on the last day of the week if inventory is at or below the reorder point, and the order is received on the first day of the second week thereafter; thus there is a week that is skipped between order placement and receipt). The current estimated cost of a lost sale is $50. Build a simulation model for this problem. This will need to be a week-by-week model that utilizes beginning inventory and demand to determine sales, ending inventory, costs, and if an order is required to be placed (again, you should have all of these calculations for each week). Calculate the annual Total Cost (sum of ordering, lost sales, and holding costs) and annual
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