If We Assume That Inventory Is Used Up at a Constant

question 6

True/False

If we assume that inventory is used up at a constant rate and safety stock is zero, the average inventory will be 1/2 the order size.

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Definitions:

Monte Carlo Simulation

A mathematical technique used to estimate the possible outcomes of an uncertain event by simulating the process with random variables numerous times.

Cumulative Probability

The probability that a random variable takes on a value less than or equal to a specified value, often visualized in the form of a cumulative distribution function.

Interval of Random Numbers

The range between the smallest and largest numbers in a set that has been chosen randomly.

Random Numbers

Sequences of numbers generated in such a way that each number has an equal chance of being any value within the defined range, used in simulations and probabilistic calculations.