Large distributor of chemicals is considering expanding

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Reference no: EM132154322

1. A large distributor of chemicals is considering expanding their distribution network to go from 6 distribution centers up to 12. If they do this, what is a reasonable approximation of the change of safety stock?

A) Safety stock would go up by around 245%.

B) Safety stock would go up by around 145%

C) Safety stock would go up by around 70%

D) Safety stock would go up by around 41%

E) Safety stock would not change, but just allocated over 12 DC's instead of 6 DC's.

2. In the case of continuous demand, the safety stock increases with the standard deviation, ?, of demand at a constant rate.

A) True

B) False

3. In the calculation of an optimal policy for an all-units discount schedule, you first compute the EOQ values for each of the three order costs, and you obtain: Q(1)=800, Q(2)=875, Q(3)=925. The all-units discount schedule has breakpoints at 750 and 900. Which EOQ value (s) is/are realizable?

A) Q(1)

B) Q(2)

C) Q(3)

D) Both Q(2) and Q(3)

4. There are two forecast models for the sales of the new Ferrari. Once sales are realized, by comparing the MAD for the two models we find that MAD1 < MAD2. We conclude necessarily that MSE1 < MSE2.

A) True

B) False

5. If total demand across 16 nodes is pooled, the Square Root Law would indicate that only 1/8 of the total safety stock is needed at a central location to support the same customer service level.

A) True

B) False

6. Postponement results in more disaggregate forecasts for end product demands.

A) True

B) False

Reference no: EM132154322

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