7
An important issue for a retailer is to decide when to reorder stock from a supplier.
A common policy used to make the decision is of a type called s, S: The retailer
orders at the end of a period if the on-hand stock is less than s, and orders enough to
bring the stock up to S. The appropriate values of s and S depend on different cost
parameters, such as inventory holding costs and the profit per item sold, as well as
the distribution of the demand during a period. Consequently, it is important for
the retailer to collect data relating to the parameters of the demand distribution.
Suppose that the following data give the numbers of a certain type of item sold in
each of 30 weeks.
14, 8, 12, 9, 5, 22, 15, 12, 16, 7, 10, 9, 15, 15, 12,
9, 11, 16, 8, 7, 15, 13, 9, 5, 18, 14, 10, 13, 7, 11
