Chapter 19 CD – Inventory Management with Uncertain Demand
True / False Questions
1. One consequence of uncertain demand is the risk of incurring shortages.
2. The objective of inventory management is to maximize customer service levels.
3. The overall objective of inventory management is to achieve satisfactory levels of customer
service while keeping inventory costs reasonable.
4. Two main concerns of inventory control relate to the costs and the level of customer
service.
5. To provide satisfactory levels of customer service while keeping inventory costs within
reasonable bounds, two fundamental decisions must be made about inventory: the timing and
size of orders.
6. The cost of overordering is the decrease in profit that results from failing to order a unit that
could have been sold during the period.
Chapter 19 CD – Inventory Management with Uncertain Demand
Multiple Choice Questions
30. Which of the following is not an assumption of the perishable product model?
31. Which of these products would be most apt to involve the use of a perishable product
model?
32. In a perishable products model, if shortage and excess costs are equal, then the optimum
service level is:
33. In a perishable products model, if the cost of underordering is four times the cost of
overordering, then the optimum service level is:
