An Auto Parts Store Wants to Simulate Its Inventory System

question 51

Multiple Choice

An auto parts store wants to simulate its inventory system for engine oil. The company has collected data on the shipping time for oil and the daily demand for cases of oil. A case of oil generates a $10 profit. Customers can buy oil at any auto parts store so there are no backorders (the company loses the sale and profit) . The company orders 30 cases whenever the inventory position falls below the reorder point of 15 cases. Orders are placed at the beginning of the day and delivered at the beginning of the day so the oil is available on the arrival day. An average service level of 99% is desired. The following spreadsheets have been developed for this problem. The company has simulated 2 weeks of operation for their inventory system. The current level of on-hand inventory is 25 units and no orders are pending.
-Using the information in Exhibit 12.3, what Risk Solver Platform (RSP) function should be used for generating a random shipping time based on the Data spreadsheet distribution for shipping time?

• A)=PsiCumul($B$6:$C$8)
• B)=PsiCustom($B$6:$B$8, $C$8:$C$8)
• C)=PsiGeneral(Data!$B$6, probability $C$8)
• D)=PsiDiscrete($B$6:$B$8, $C$8:$C$8)

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Definitions:

Merchandise Inventory

Goods and products that a firm holds with the intent to sell them as part of its business operations; considered a current asset on the balance sheet.

Perpetual Inventory System

A method for accounting inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

MasterCard

A multinational financial services corporation that facilitates electronic funds transfers globally, primarily through its branded credit and debit cards.

American Express

A global financial services company recognized for its services in credit cards, charge cards, and traveler's cheque operations.