QUESTION 12 Consider the case where a business orders from a supplier using a co

Question

QUESTION 12 Consider the case where a business orders from a supplier using a continuous review (Q) system, and in quantities that are consistent with the Economic Order Quantity (EOQ) How should the following change to a cost parameter or a condition affect their order quantity (assuming that they adjust their order quantities accordingly)? If average demand does not change, but the variability in demand increases (i.e., demand becomes less stable, but with a comparable average over time), then the order quantity should a. increase b. decrease .c. not be changed (stay the same) QUESTION 13 Assume a continuous review (Q) inventory control system. What should be the effect of the following change on safety stock (assuming that they adjust their order practices accordingly)? If an electronic data interchange (EDI) system is implemented to reduce the administrative cost of placing and order, then safety stock should a. increase Ob. decrease c. not be changed (stay the same)

Explanation / Answer

12. a. Increase. to meet variiable demand.

13. c. No effect- since thay aren't related

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