A company experiences both variable usage rates and variable lead times for its inventory items. The probability distributions for both usage and lead times are known. A technique the company could use for determining the optimal safety stock levels for an inventory item is.

Simulation - is a method using a computer to experiment with mathematical models.

Explanation:

Simulation of Monte Carlo is a process of computing the individual values for a randomized factor.

A random number generator is used for production of numbers with such a standardized allocation of probability. The Monte Carlo process's second step then converts the random numbers to values compatible with the target distribution.

A model's output within circumstances of instability can be examined by spontaneously picking values in each of the variables in the model depending on each variable's probability distribution, and afterwards computing the solution's value.

explanation:

the contractual interest rate is the interest the borrower must pay and the interest the lender receives, or more simply, it is the interest rate stated on a bond whereas the market interest rate is “the investors demand for loaning funds”. therefore, bonds can either be sold at a premium, face value, or discount.

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