Question 1

If demand rate D is normally distributed with mean and standard deviation , the probability that we will actually observe demand equal to or greater than mean demand, that is D is ________.

Group of answer choices

less than 0.5

more than 0.5

0.5

cannot be said from the given data

Question 2

The critical ratio C R = C u C u + C o

Group of answer choices

is always more than the service level.

is always less than the service level.

has nothing to do with the service level.

is what the service level should be.

Question 3

For Roy, the Newsvendor, suppose daily demand is normally distributed, with some mean and some standard deviation .

Upon calculating the cost of underage Cu and the cost of overage Co, Roy noticed that Cu

Which of the following is true about the optimal order quantity Q for Roy?

Hint: the optimal order quantity should be equal to the on-hand inventory level which will maximize profit. Therefore, at the optimal order quantity, the service level should be equal to the critical ratio.

Remember, SL is the cumulative prob. distribution of z. Higher z results in higher SL. So, z = 0 corresponds to 50% service level. Also, z 0 corresponds to SL > 50%.

Also, since for the newsvendor, Q = + z * , you will order more than if z > 0 and less than if z

Group of answer choices

Q > .

Q

Q = .

cannot say without more information.

Question 4

A Newspaper seller buys papers at $1 apiece and sells them to consumers at $2 apiece. Unsold papers can be sold to recycling stations at 25 cents apiece. There is no additional significant lost goodwill. The critical ratio for the newspaper seller is approximately ____.

Group of answer choices

0.47

0.50

0.57

0.61