A Company Produces a Product Consisting of Two Components Arranged

question 31

Multiple Choice

A company produces a product consisting of two components arranged as follows:

Both components must function for the product to function. To achieve an overall reliability of at least 0.95 without changing the reliability of the 1^st component, the reliability of the 2^nd component would need to be at least

• A) 0.925.
• B) 0.95.
• C) 0.97.
• D) 0.98.

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Definitions:

Safety Stock

Extra inventory kept on hand to protect against stockouts caused by variations in supply and demand.

Service Level

A measure of the quality of service provided to customers, often quantified as the percentage of customer demands met on time.

Lead Time

The total time it takes to complete a process from start to finish, often measured from the initiation to the delivery of a product or service.

Optimal Order Size

The ideal quantity of inventory to order that minimizes the total costs associated with ordering, carrying, and stockouts.