10 Questions
What principle broadens the idea of few items having great importance and many items having little importance?
Pareto Principle
What classification scheme divides inventory items into high dollar volume, moderate dollar volume, and low dollar volume categories?
ABC Inventory Classification
What measure is used to assess the importance of an inventory item in the context of inventory management?
Dollar Volume
What is the marginal cost associated with underestimating demand in this scenario?
$0.30
How many extra papers are needed to be 80% sure of not stocking out based on the provided information?
9 papers
In inventory management, when is the optimal stocking level reached?
When the expected benefits from carrying one more unit exceed the expected costs for that unit
What is the risk of stocking out if the newsperson wants to be 80% sure of not running out of papers each Monday?
50%
Why is it important for the newsperson to find the optimal stocking level for papers in the sales stand?
To maximize profits by balancing between lost sales and overstock costs.
How does understanding the demand distribution help the newsperson in managing inventory?
It allows for setting an acceptable service rate to avoid stocking out.
What would happen if the newsperson stocked significantly more papers than the average demand of 90 papers on Mondays?
The newsperson would incur unnecessary costs for overstocked papers.
This quiz covers calculations related to inventory management, such as determining the number of extra papers needed to prevent stocking out with a certain level of confidence. It also involves understanding the cumulative standard normal distribution table.
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