In Setting the Reorder Point for an Item with Variable

question 46

Multiple Choice

In setting the reorder point for an item with variable demand,a service level of 95% will imply which of the following?

• A)Stockouts may occur only 5 times during the phase of 100 inventory cycles.
• B)5% of the supplier shipments will be late.
• C)There is a 0.05 probability that the forecasted demand is not accurate.
• D)The forecast demand will be accurate 95% of the time.

---

Definitions:

Correlation Coefficient

A numerical measure that indicates the strength and direction of a linear relationship between two variables.

Mean

A measure of central tendency, calculated as the sum of all values in a dataset divided by the number of values.

Geometric Mean

The average of a set of numbers or quantities, computed by taking the nth root of the product of the numbers.

Mode

The value that appears most frequently in a data set, a measure of central tendency.