Inventory Management: Questions and Answers, Exams of Business Statistics

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P371 QUESTIONS & ANSWERS 2025

The technique is best utilized to manage inyentorics of individual items that experience independent demand, — ANS-VW Fixed Order Quantity (Reorder Point) Model Which choice (s) correctly complete the following statement? A distributor manages its inventory using the Reorder Point technique and statistically determined safety stock. If the lead time for a particular item is increased, then the service level for that item (Hint: Look at the safety stock and reorder point formulas: these will be provided on the actual exam along with a copy of the probability table) - ANS-WW1I, will be reduced if the amount of safety stock is left unchanged II. requires an increase in safety stock to maintain the current service level A distributor reccives some products from a particular manufacturer with a promised lead-time of five days. Actual experience reveals that this lead-time can be relied upon; there has been little, if any, variation from the five-day promise. Duce to some major highway construction in their area, the manulacturer informs the distributor that the lead-time will increase to seven days. The distributor has determined that yariation in actual customer demand from forecast approximates a normal probability distribution. The lead-time change will not affect this. The distributor uses the reorder point technique (continuous review system) and statistically determined safely stock lo manage ils inventories. Which of the following will be true concerning potential impacts upon the distributor's inventory of the affected products? J, The reorder points should be increased whether or not the safety stock is increased. Il. The r — ANS-WWI1, The recorder points should be increased whether or not the safely stock is increased. IV. To maintain the existing service level, the salely stock will have to increase. Inventory management techniques (such as reorder point, EOQ, and MRP) seek to answer which of the following questions?