1. Additional inventory kept over and above the average amount required to meet demand is called _____ inventory.
a. Seasonal
b. Work-in-process
c. Finished goods
d. Safety stock
2. Based upon your readings of your textbook, backorders ______.
a. result from lost sales
b. have little financial impact
c. always creates new setup and holding costs
d. force a customer to purchase elsewhere
e. may occur as a result of a inventory stockout action
3. Based on the information in your textbook, which one of the following statements is the most correct?
a. The level of safety stock maintained decreases when the desired cycle-service level increases.
b. The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.
c. In a fixed period inventory system, the value of Q is kept the same from one cycle to another.
d. When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles.
e. None of the above are possible.