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:

Correction

A process of adjusting or rectifying errors in financial statements or any documents.

Intangible Assets

Assets that lack physical substance and represent legal rights or competitive advantages (e.g., trademarks, patents).

Physical Substance

A characteristic of certain assets that possess material existence and can be seen, touched, or quantified.

Ownership

The legal right or state of having control and possession over something, such as property or a company.