Exhibit 12.3 The Following Questions Use the Information Below

question 54

Multiple Choice

Exhibit 12.3
The following questions use the information below.
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 formula should go in cell H8 to determine if an order should be placed?

• A) =IF(G8<$D$3,1,0)
• B) =IF(G8>$D$3,1,0)
• C) =IF(G8<$D$3,0,1)
• D) =IF(G8<$D$4,1,0)

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Definitions:

Monopoly

A market structure characterized by a single seller dominating the market, without any close substitutes.

Original Treatment

This could refer to the initial set of conditions or interventions in an experiment or study, especially before any variables are changed for further testing.

Compensating Differential

A difference in wages that arises from non-monetary characteristics of different jobs, such as risk or undesirable location.

Baker

A person who primarily bakes and sells bread, pastries, and other baked goods as their profession.