The Costs That Result When a Company Runs Out of a Particular

question 2

Multiple Choice

The costs that result when a company runs out of a particular item for which there is a customer demand are ________.

• A) shrinkage costs
• B) shortage costs
• C) stockout costs
• D) EOQ estimation costs

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Definitions:

Standard Normal Distribution

A probability distribution that has a mean of zero and a standard deviation of one, representing a perfect bell curve.

Continuous Probability Distributions

Mathematical functions that represent the probabilities of all possible values in an unbroken (continuous) range.

Exponential Distributions

A type of continuous probability distribution that is often used to model the time between independent events that happen at a constant average rate.

Uniform Probability Distribution

A continuous probability distribution for which the probability that the random variable will assume a value in any interval is the same for each interval of equal length.