Refer to the data in Solved Problem 13-1, which deals with Higgins Plumbing and

Heating. Higgins has now collected 100 weeks of data and finds the following
distribution for sales:
Hot Water Number of
Heater Sales Weeks This
Per Week Number Was Sold
3 ………………………………. 2
4 ………………………………. 9
5 ………………………………. 10
6 ………………………………. 15
7 ………………………………. 25
8 ………………………………. 12
9 ………………………………. 12
10 ……………………………… 10
11 ……………………………… 5
(a) Resimulate the number of stockouts incurred over a 20-week period (assuming
Higgins maintains a constant supply of 8 heaters).
(b) Conduct this 20-week simulation two more times and compare your answers with
those in part (a). Did they change significantly? Why or why not?
(c) What is the new expected number of sales per week?

SOLUTION

Higgins plumbing:

Random
Number
Heater Sales Probability Intervals
3 0.02 01–02
4 0.09 03–11
5 0.10 12–21
6 0.15 22–36
7 0.25 37–61
8 0.12 62–73
 9 0.12 74–85
10 0.10 86–95
11 0.05 96–00
1.00

a.

Random Simulated
Week Number Sales
1 10 4
2 24 6
3 03 4
4 32 6
5 23 6
6 59 7
7 95 10
8 34 6
9 34 6
10 51 7
11 08 4
12 48 7
13 66 8
14 97 11
15 03 4
16 96 11
17 46 7
18 74 9
19 77 9
20 44     7
139

With a supply of 8 heaters, Higgins will stock out 5 times during the 20-week
period (in weeks 7, 14, 16, 18, and 19).

b.   Average sales by simulation = total sales/20 weeks = 139/20 = 6.95. Other
simulations by students will yield slightly different results.

c.   Using expected values, E(sales) = (0.02)(3) + (0.09)(4) + (0.10)(5) + (0.15)(6) +

(0.25)(7) + (0.12)(8) + (0.12)(9) + (0.10)(10) + (0.05)(11) = 7.16 heaters. In a
longer time simulation, these two approaches will lead to even closer values.