Question

1.

1. Which of the following is a key measure of supply uncertainty?

		a. Average demand per period
		b. Standard deviation of demand per period
		c. Average replenishment lead time
		d. Standard deviation of replenishment lead time

2.

1. A strategy to reduce lot size and in turn reduce cycle inventory is:

		a. Increase Transportation costs
		b. Base promotions on sell through
		c. Base promotions on sell in
		d. Offer discounts for large lot purchases

Answer 1

1. Key measure of supply uncertainty is standard deviation of replenishment lead time, which determines how uncertain the supply might be. Option d is right

2. Strategy to reduce the cycle inventory is to base promotions on sell through, where inventory starts depleting at a faster rate as cutomers buy more freuently owing to promotions, reducing average cycle inventory. Option b is right.