Answer All question in True or False:

Q- 1 When demand is uncertain and a particular level of inventory has to be decided before the actual demand is seen, the following can be said about the lost sales after the demand is realized:

Lost Sales = Minimum of {Demand, Inventory}.

Q-2 Suppose you are facing uncertain demand which follows a discrete distribution.

You need to provide a service level of 90%.

Your demand distribution has no demand value corresponding to a cumulative probability of 90%. There are two values, one that has a cumulative probability of 80%, and the other has a cumulative probability of 100%.

You should choose the value that has a cumulative probability of 80%.

Q-3 All else being equal, if you are facing supply and/or demand uncertainties, then a continuous inventory review model, such as the (Q, r) Model will result in lower safety stock requirement, compared to a periodic inventory review model, such as the OUL Model.

Q-4 In the (Q, r) Model, the review of inventory happens in fixed intervals of time.

Q-5 When any leftover product cannot be carried forward to the next period and must be either discarded or salvaged, the Newsvendor Model is more suitable than the (Q, r) Model.