Reference no: EM132115290

1) For an order-up-to model with lead time L periods, which of the following statement is TRUE

Order will be placed every L + 1 periods

Order will be received every L + 1 periods

Inventory decision is made to balance the supply and demand over L+1 periods

Safety stock increases proportionally in lead time L, i.e., if lead time L increases n times, safety stock also increases n times

2) Demand each period is normally distributed and an order up-to model is used to decide order quantities. Which of the following influences the chosen order up-to level (i.e., a change in which of the following would change the chosen order up-to level)?

I. The mean of demand in one period

II . The standard deviation of demand over L+1 periods

III. The target in-stock probability

a) Only I

b) Only II

c) Only II

d) I and II

e) I and III

f) II and III

g) I, II and III

3) Which of the following statement of risk pooling effect is NOT true

Risk pooling effect improves the business’s profit by attracting more demand

Risk pooling effect reduces the inventory holding cost by reducing safety-stock

Risk pooling effect is more significant when the inventory consolidation scale is larger

Risking pooling effect enables the business to achieve the same critical ratio using less inventory