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:

Treisman's Attenuation Theory

A theory proposed by Anne Treisman that suggests information is processed at varying levels of attention, where some stimuli are attended to less intensely but not completely filtered out.

Lowered Thresholds

A decrease in the minimum level of stimulus intensity required to produce a perceptible sensation or response.

Stroop Task

A cognitive experiment that demonstrates the interference in reaction time between different tasks, notably when naming the ink color of a word that denotes a different color.

Color Names

The labels or terms used to describe and categorize colors, often based on cultural and linguistic contexts.