Recall the inventory simulation of Sec. 1.5, as used in Example 11.12 to illustrate AV. Th...

Recall the inventory simulation of Sec. 1.5, as used in Example 11.12 to illustrate AV. There are three sources of randomness (interdemand times, demand sizes, and delivery lags), and three cost components (ordering, holding, and shortage). Analyze this model, as programmed in Sec. 1.5, to provide a rationale for AV. Specifically, see what the effect of a small (or large) random number would be on each of the three types of costs if it is used to generate each of the three types of input random variables. For example, suppose that a small U is used to generate an interdemand time. Would this tend to make the ordering cost generally large or small, other things being equal?

Example 11.12