An Auto Parts Store Wants to Simulate Its Inventory System

question 11

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 in cell D8 and copied to cells D9:D21 of the MODEL sheet to compute daily demand?

• A)=PsiDiscrete($E$6:$E$13, $F$6:$F$13)
• B)=PsiHypergeo($E$6:$F138)
• C)=PsiBinomial($E$6, $F$13)
• D)=PsiCustom(Data!$E$6, $F$13)

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Definitions:

Residual

The difference between an observed value and the value predicted by a model.

Multiple Regression Model

A statistical technique used to predict the value of a dependent variable based on the values of two or more independent variables.

Multiple Coefficient

Often refers to the multiple correlation coefficient in statistics, describing the strength and direction of a linear relationship between more than two variables.

Determination

In statistical analysis, it often refers to the extent to which variation in one variable determines or predicts the variation in another variable, commonly assessed with the coefficient of determination (R²).