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Exam 19: Inventory management with uncertain demand

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Question 1

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In a perishable products model,if the cost of underordering is four times the cost of overordering,then the optimum service level is:

A) 1
B) 0 8
C) 0 6
D) 0 4
E) 0 2

F) A) and D)
G) None of the above

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Question 2

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In the perishable product model,the service level is the probability that demand will not exceed the stocking level

A) True
B) False

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Question 3

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When the item is used in production or is a spare part for a production machine,shortage costs in the perishable product model include the cost of lost production

The average demand for an item is 20 units per day,safety stock is 50 units,and lead time is four days,the reorder point will be:

The objective of inventory management is to maximize customer service levels

Estimating shortage costs requires a managerial assessment

Which of these products would be most apt to involve the use of a perishable product model?

The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable

Customer service level and risk of a stockout are related

(R,Q)policies indicate to managers the time between orders

Shortage costs are easily quantified

The rate of demand is an important factor in determining the reorder point

The perishable product model can be very helpful in determining how much to order

Holding costs may include:

Service level can be measured by:

The perishable product model can be very helpful in determining when to order

Service level can be stated in terms of an order cycle or as an annual amount

Which one of these would not be a factor in determining the reorder point?

The cost of overordering is the decrease in profit that results from failing to order a unit that could have been sold during the period

Two main concerns of inventory control relate to the costs and the level of customer service