Average Inventory Under a Q System

question 28

Multiple Choice

Average inventory under a Q system:

• A)Is depleted at a constant rate
• B)Is set to cover average demand over lead time plus the review intervals
• C)Is relatively flat in the neighborhood of the minimum
• D)Tends to be less than under a system of periodic review at fixed internals

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Definitions:

Tariff

A levy placed by a government on imports to manage trade amounts and safeguard local sectors.

Brazilian Ethanol

Ethanol fuel produced in Brazil, primarily from sugarcane, used as a biofuel alternative to gasoline.

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a product and the actual price they pay, reflecting consumer gain.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.