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1. Cycle inventory would increase if:
a. the annual demand for an item fell.
b. the cost of capital fell.
c. the cost to place an order fell.
d. the supplier had one price regardless of the quantity ordered.
2. In the newsvendor model, expected shortage per season
a. is the on-hand inventory minus the expected demand
b. decreases as the demand increases
c. is non-zero only when the expected demand is more than on-hand inventory
d. can be negative
e. none of the above
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