Suppose in the order-up-to model the target in-stock probability is .95 and demand across periods is independent

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Suppose in the order-up-to model the target in-stock probability is .95 and demand across periods is independent and normally distributed. If the lead time is doubled but the target in-stock probability remains .95, what happens to the order-up-to level? 

a. It more than doubles (increases by more than a factor of two). 

b. It doubles (increases exactly by a factor of two). 

c. It increases but by less than a factor of two. 

d. It decreases. 

e. The answer cannot be determined with the given information.

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Operations Management

ISBN: 9781260547610

2nd International Edition

Authors: Gerard Cachon, Christian Terwiesch

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