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 06,63,57,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

To simulate lead times, we use the percentages given to determine the intervals in which the random numbers must fall. 
- For 06, since it falls in the range 01-20, the lead time is 1 day. 
- For 63, since it falls in the range 61-90, the lead time is 3 days. 
- For 57, since it falls in the range 31-60, the lead time is 2 days. 
- For 02, since it falls in the range 01-20, the lead time is 1 day. 
The total lead time for these four draws is 1+3+2+1= 7 days. To find the average lead time, we divide by the number of draws, which is 4. The average lead time is therefore 7/4 = 1.75 days. Thus, the best choice is (A).

A Distribution of Lead Times in an Inventory Problem Indicates