Exam 2

Question 1

What are the 2 objectives of the newsvendor model

Answer 1

minimize the expected total cost, maximize the expected net profit

Question 2

for non qr The inventory is reviewed on a blank basis

Answer 2

periodic

Question 3

for non qr there is a blank planning period

Answer 3

single

Question 4

for non qr the demand is blank, and the underlying probability distribution for the demand is blank

Answer 4

random, known

Question 5

for non qr the order quantity can be a blank or a blank value depending on the type of random variable that is used to characterize the random demand

Answer 5

continuous, integer

Question 6

for non qr the system under consideration is a blank item system

Answer 6

single

Question 7

for non qr the cost and revenue parameters for the period are blank

Answer 7

known

Question 8

for non qr there is blank fixed cost associated with placing an order

Answer 8

no

Question 9

for non qr the order delivery time is blank

Answer 9

zero

Question 10

for non qr shortages are allowed

Answer 10

true

Question 11

X

Answer 11

random variable that represents the demand in the period

Question 12

f(x)

Answer 12

probability density function

Question 13

F(x)

Answer 13

cumulative distribution function of X

Question 14

Co

Answer 14

unit cost of overage

Question 15

Cu

Answer 15

unit cost of underage

Question 16

q

Answer 16

number of units to be ordered prior to the beginning of the period

Question 17

c(q,X)

Answer 17

the total cost at the end of the period

Question 18

C(q)

Answer 18

expected cost function

Question 19

how is the critical ratio derived

Answer 19

Using Leibnitz rule

Question 20

p

Answer 20

unit selling price

Question 21

c

Answer 21

unit purchase cost

Question 22

v

Answer 22

unit salvage revenue

Question 23

b

Answer 23

unit loss of goodwill

Question 24

p(q,X)

Answer 24

the total net profit at the end of the period

Question 25

P(q)

Answer 25

the expected net profit function

Question 26

what is loss of good will

Answer 26

cost for each unit of unsatisfied demand

Question 27

Single variable unconstrained optimization problem

Answer 27

true

Question 28

to guarantee the desired coverage for a discrete random variable, we have to make sure the cumulative distribution value covers the what

Answer 28

critical ratio value

Question 29

q in backlogging

Answer 29

order-up-to level

Question 30

T in backlogging

Answer 30

finite horizon length

Question 31

Xt in backlogging

Answer 31

demand

Question 32

What are the revenues and costs incurred throughout the planning horizon for backlogging

Answer 32

purchase cost for first period
purchase cost for periods 2 and beyond
sales revenue in periods 1 and on
sales revenue for the last period
expected backordering cost

Question 33

why does h=Co for backlogging

Answer 33

since we can use the left over units to satisfy the demand in the next period

Question 34

What are the 2 limitations with the newsvendor model

Answer 34

there is not setup cost for placing an order
the order replenishment is instantaneous

Question 35

what are the 2 decision variables for stochastic demand

Answer 35

reorder level (when to order)
order size (how much to order)

Question 36

for qr the inventory level is reviewed on a blank basis

Answer 36

continous

Question 37

for qr the planning horizon is blank

Answer 37

infinite

Question 38

for qr the demand is blank and follows a stationary underlying process, the parameters of the process do not change over time

Answer 38

random

Question 39

for qr the order quantity can be a blank value

Answer 39

continuous

Question 40

for qr there is a blank lead time for the delivery of an order

Answer 40

positive

Question 41

for qr the entire order quantity can be delivered at the blank of the lead time

Answer 41

end

Question 42

for qr the cost and revenue parameters are blank and blank throughout the planning horizon

Answer 42

known and constant

Question 43

for qr there is a fixed cost with ordering

Answer 43

true

Question 44

s

Answer 44

safety stock level

Question 45

both the mean and the variance of the random variable that represents the random demand are scaled by the lead time, which is equivalent to the sum of tau identically and independently distributed random variables

Answer 45

true

Question 46

extra stock that is maintained to mitigate the risk of shortages dues to uncertainties in supply and demand

Answer 46

safety stock

Question 47

for modeling purposes what is the safety stock

Answer 47

will be used to describe the on-hand inventory level when an order is delivered

Question 48

how many units are drawn from the inventory throughout the lead time

Answer 48

this quantity is equal to the demand during lead time

Question 49

what is the relationship between Ud and lambda Ud

Answer 49

the expected demand per period

Question 50

observed demand = what

Answer 50

order quantity such that 0<t<T

Question 51

what happens to f(q) when cost overage increases

Answer 51

f(q) decreases, bc it gets costlier to have too much so you want to stock less

Question 52

what happens to f(q) when cost of underage decreases

Answer 52

f(q) decreases, because the rate of decrease in the numerator is going to become smaller faster than the rate of decrease in the denominator