Exhibit 12.3 The Following Questions Use the Information Below

question 75

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.
-Why would a manager be interested in analyzing risk?

• A) To determine a most likely outcome.
• B) To determine a range of outcomes.
• C) To determine a distribution of outcomes.
• D) To determine a confidence interval on most likely outcomes.

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Definitions:

Behavior Therapist

A professional who uses principles of learning and conditioning to treat psychological disorders and improve behavior.

Psychotherapy

A therapeutic treatment approach involving psychological methods, particularly when based on regular personal interaction to help a person change behavior and overcome problems in desired ways.

Transference

denotes the redirection of a patient's feelings for a significant person to the therapist, often observed in psychoanalytic therapy.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.