1. When demand is continuously distributed, calculating Lost Sales can be a tricky business. For demand that follows a normal distribution, we do have a nice shortcut. First, we determine the z-value corresponding to the service level we desire. Then, the Expected Lost Sales is given by L(z)L(z), where denotes the standard deviation of demand, and L(z)L(z) denotes ________.

A. the probability of z

B. the cumulative probability of z

C. the standard normal loss function of z

D. the value of z

2. As we keep increasing z, the value of the standard normal loss function ________.

A. increases

B. decreases

C. stays the same

D. cannot be determined

3. If we decide to increase the on-hand inventory, by ordering a larger quantity, we will have:

A. a higher z-value

B. a lower standard normal loss function value

C. a lower value of expected lost sales

D. all of the above

4. For the same choice of z, a higher standard deviation results in a lower expected lost sales.

True

False