LINK: https://afifnurichwan.files.wordpress.com/2015/06/inventory-control-and-management-second-edition.pdf

-Short answers will do help.

CHAPTER 5 (Models for Uncertain Demand)

Discussion questions

5.1 By definition, we cannot predict uncertain things. What, then, is the point of building models that contain uncertainty?

5.2 Service level models assume that we can define an acceptable level of service. But surely we should be aiming for perfect service, in the same way that Total Quality Management aims for perfect quality. Is this a major flaw in these models?

5.3 If we include shortage costs, we find that the optimal order quantity is higher than the EOQ. The reasoning is that orders are bigger to avoid shortages. But the EOQ calculation assumes that shortages are so expensive that they must never occur. Has some calculation gone wrong?

5.4 As they give lower stocks, fixed order quantity methods should be used whenever possible. Do you think that this is true?

5.5 What types of uncertainty are important in real inventory methods, but have not been included in the models we have described? How could we add these factors?

5.6 What features would you expect to see in a computerized inventory control package? Look at some commercial packages and compare the features they offer. (You can find information about many packages on the Web.)

5.7 If we kept removing the assumptions in our analyses we would end up with a model that would accurately describe the operations of any stocks. Admittedly this model might be quite complex, but an organization would simply have to substitute the appropriate values to find its best inventory policy. Is this a realistic view?