010. [Iptl Furniture Brands Inc. (FBI) is the sole supplier to a large number of
ID: 425036 • Letter: 0
Question
010. [Iptl Furniture Brands Inc. (FBI) is the sole supplier to a large number of independent and similarly sized retail furniture outlets. These retailers placed orders on a weekly basis and on each day of the week nearly the same number of retailers submitted orders. In an effort to improve supply chain performance, FBI managed to convince 95% of retailers to submit orders on Monday and the remaining retailers ordered on the other days of the week. Which of the following statements regarding the mean and standard deviation of the retailers' total daily orders (i.e., FBI's demand) remains true after the performance improvement effort? a) The mean and the standard deviation of the orders received have increased. b) The mean and the standard deviation of the orders have now decreased because nearly all of the orders are now submitted on Mondays. c) The mean of the orders is lower but the standard deviation of the orders has increased. d) Only the timing of orders has changed, therefore the mean and the standard deviation of the orders continue to remain the same. e) The mean remains the same but the standard deviation of the orders has increased. f) The mean remains the same but the standard deviation of the orders has decreased because of better supply chain coordination.Explanation / Answer
The correct answer is option e.
As the number of orders during the entire week will remain the same irrespective of the actual day of the week when it is ordered, hence, the mean,i.e the total number of orders divided by the number of days of the week would remain the same.
On the other hand, the standard deviation of the daily demand would increase as the mean of all the orders would remain the same but the variability of the daily demand would be spread out from being very high on one particular day,i.e. Monday and very low on all the remaining days. Thus the standard deviation would increase.
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