$(4$ points$)$ Ordering the optimal order quantity $($newsvendor model$)$ is guaranteed to always

result in more profit than ordering the forecasted amount.

$($a$)$ True

$($b$)$ False

$(4$ points$)$ Which of the following statements is true in processes with setup costs.

$($a$)$ Increasing order quantity decreases overall inventory costs.

$($b$)$ Increasing order quantity decreases setup costs.

$($c$)$ At the economic order quantity, setup costs are strictly larger than inventory holding

costs.

$($d$)$ At the economic order quantity, process capacity is maximized.