UARK SCMT 2103 UPDATED SETS ANSWERS AND
QUESTIONS SET A+
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an attractive offer from a re-seller should any overstocking
occur. Consequently, the order quantity is expected to _________. - ✔✔increase
✔✔If a retailer purchases a certain item under the newsvendor model and the optimal
in-stock probability is 76% - which is 0.71 standard deviations above the mean - what
would be the optimal order quantity given that the average expected demand is 60 with
a standard deviation of 10? (Round up) - ✔✔68
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an expected increase in transportation costs that will affect
profit margin. Consequently, the order quantity is expected to _________. -
✔✔decrease
✔✔A retailer's risk decreases ____________. - ✔✔all of the above
when its supplier lowers its prices.
when it locates favorable salvage alternatives.
when its transportation costs decrease.
✔✔Which of the following statements is TRUE? - ✔✔If the producer/manufacturer
reduces its prices to a retailer, the retailer's profit margins increase.
✔✔In the newsvendor model, if the producer charges ______, the cost of overstocking
goes _____ and the cost of understocking ______. - ✔✔less; down; goes up
, ✔✔Generally in the newsvendor model the optional order quantity will ______ when the
producer's price _____. - ✔✔increases; decreases
✔✔As the order quantity decreases, what happens to inventory holding cost? - ✔✔It
should decrease
✔✔If lead time increases, what should happen to the reorder point? - ✔✔It should
increase
✔✔The Economic Order Quantity (EOQ) seeks to - ✔✔Minimize the setup cost and
holding cost.
✔✔When demand and lead time are uncertain, the reorder point is made up of which of
the following? - ✔✔Safety Stock
Expected demand during the lead time
✔✔As a customer increases service level to 99% from 97%, what will likely happen? -
✔✔The customer will increase safety stock
✔✔Which two basic questions does an inventory policy answer? - ✔✔How should an
order be placed
When should an order be placed
✔✔ Which are important customer-level information types? - ✔✔All of the above
Point of sale
Forecasts
Inventory levels
Promotional plans
✔✔Data that is captured at retail checkout is referred to as __________________ data.
- ✔✔point-of-sale
✔✔Advanced shipment notices (ASNs) is a ___________-level information type. -
✔✔supplier
✔✔How specific is point-of-sale data? - ✔✔SKU-time-location specific
✔✔Which are fundamental characteristics of firms with high internal integration? -
✔✔They integrate planning activities.
They facilitate information exchange across functional areas.
QUESTIONS SET A+
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an attractive offer from a re-seller should any overstocking
occur. Consequently, the order quantity is expected to _________. - ✔✔increase
✔✔If a retailer purchases a certain item under the newsvendor model and the optimal
in-stock probability is 76% - which is 0.71 standard deviations above the mean - what
would be the optimal order quantity given that the average expected demand is 60 with
a standard deviation of 10? (Round up) - ✔✔68
✔✔A retailer estimated demand for next year's blue sweaters at 1,000 and a standard
deviation of 100. The optimal in-stock probability is about 83% and the order quantity is
1,100. The retailer learns of an expected increase in transportation costs that will affect
profit margin. Consequently, the order quantity is expected to _________. -
✔✔decrease
✔✔A retailer's risk decreases ____________. - ✔✔all of the above
when its supplier lowers its prices.
when it locates favorable salvage alternatives.
when its transportation costs decrease.
✔✔Which of the following statements is TRUE? - ✔✔If the producer/manufacturer
reduces its prices to a retailer, the retailer's profit margins increase.
✔✔In the newsvendor model, if the producer charges ______, the cost of overstocking
goes _____ and the cost of understocking ______. - ✔✔less; down; goes up
, ✔✔Generally in the newsvendor model the optional order quantity will ______ when the
producer's price _____. - ✔✔increases; decreases
✔✔As the order quantity decreases, what happens to inventory holding cost? - ✔✔It
should decrease
✔✔If lead time increases, what should happen to the reorder point? - ✔✔It should
increase
✔✔The Economic Order Quantity (EOQ) seeks to - ✔✔Minimize the setup cost and
holding cost.
✔✔When demand and lead time are uncertain, the reorder point is made up of which of
the following? - ✔✔Safety Stock
Expected demand during the lead time
✔✔As a customer increases service level to 99% from 97%, what will likely happen? -
✔✔The customer will increase safety stock
✔✔Which two basic questions does an inventory policy answer? - ✔✔How should an
order be placed
When should an order be placed
✔✔ Which are important customer-level information types? - ✔✔All of the above
Point of sale
Forecasts
Inventory levels
Promotional plans
✔✔Data that is captured at retail checkout is referred to as __________________ data.
- ✔✔point-of-sale
✔✔Advanced shipment notices (ASNs) is a ___________-level information type. -
✔✔supplier
✔✔How specific is point-of-sale data? - ✔✔SKU-time-location specific
✔✔Which are fundamental characteristics of firms with high internal integration? -
✔✔They integrate planning activities.
They facilitate information exchange across functional areas.
