# operations-management Essay In a particular setting where the newsvendor

In a particular setting where the newsvendor model applies, demand is Normally distributed and the critical ratio is known to be 0.8. Then, if the profit maximizing quantity were ordered, a)the expected sales is less than expected demand; b)the expected sales is greater than expected demand; c)the expected sales is exactly equal to expected demand; d)the expected sales could be less than, equal to or greater than expected demand.***In the newsvendor model, if the fill-rate is 99% which of the following is always true: a)the in-stock probability is also 99%;b)the gross margin is 1%;c)the net profit is 1% of revenue; d)the critical ratio is 0.99;e)none of the above.***Which of these statements is/are true for the newsvendor model? I. Expected sales + Expected leftover inventory = Expected demand. II. Expected sales + Expected lost sales = Quantity purchased (Q).III. In-stock probability = .a)I only. b)II only. c) III only. d) I and II. e)All of the above (I, II and III).f)None of the above.***Consider two products A and B that have identical cost, retail price and demand parameters and the same short selling season (the summer months from May through August). The newsvendor model is used to manage inventory for both products. Product A is to be discontinued at the end of the season this year, and the leftovers will be salvaged at 75% of the cost. Product B will be re-offered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each unit left over equal to 20% of the product’s cost. How do the stocking quantities for these products compare?a)Stocking quantity of product A is higher.b)Stocking quantity of product B is higher.c)Stocking quantities are equal.d)The answer cannot be determined from the data provided.***ONeill sells the same 3mm boot for surfing every year. Because this is a functional product with little fashionable content, ONeill believes that this is a stable product, i.e., expected demand doesnt change from year to year. However, sales are concentrated in a short period during the summer. ONeill plans to use sales data from the last five years to forecast demand this year. Those data are 850, 1025, 1000, 990 and 875. Note, due to the short selling season, in two of the seasons ONeill ran out of boots, whereas in three of those seasons ONeill had boots left over at the end of the season and they were held over until the next season. What is the mean of the demand forecast?a)The mean of ONeills demand forecast should equal 948.b)The mean of ONeills demand forecast should be greater than 948.c)The mean of ONeills demand forecast should be less than 948.d)It is not possible to determine whether ONeills forecast should be 948, greater than 948 or less than 948.***When using A/F ratios to construct a demand forecasta)It is necessary that you have at least 20 data observations to construct a reasonable forecast.b)The products you use to collect your data should be physically similar.c)You should not combine data from multiple seasons.d)The demand forecast you generate using an empirical A/F ratio distribution function could be quite similar to one generated by fitting a Normal distribution function.e)Choices a-d are all incorrect.f)Choices a-d are all correct.***A reseller supports a sales team that is responsible for selling a group of products. The reseller plans to use the newsvendor model to guide ordering decisions for these products. How should the total salaries of the sales force be incorporated into the newsvendor model analysis? (Focus only on salaries, i.e., ignore sales bonuses or other forms of compensation.)a)Salary costs should be prorated across products based on expected sales and that prorated amount should be added to the products variable cost.b)Salary costs should be prorated across products based on expected sales and that prorated amount should be added to the products overage cost.c)Salary costs should be prorated across products based on expected purchase quantities and that prorated amount should be added to the products variable cost.d)Salary costs should be prorated across products based on expected purchase quantities and that prorated amount should be added to the products overage cost.e)Salary costs should not be included in the newsvendor analysis.***Suppose a company uses the newsvendor model to manage its inventories and faces normally distributed demand with a coefficient of variation = 1. The company decides to order a quantity that exactly equals its mean demand forecast. Which of the following is true regarding this companys performance measures?a) The probability of serving all the demand is 50%b) Expected lost sales is 50% of mean demandc) Expected sales is equal to mean demandd) Expected left over inventory is 0e) The fill rate is 50%

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