Question

In a shop, the average rate at which customers arrive λ (lambda) per hour = 10 customers. The average rate at which customers are served µ (mu) = 12 customers served per hour. Could a waiting line form?

	a.	Yes, because there is variability in both arrival and service rates
	b.	No, because the average service rate is higher than the average customer arrival rate
	c.	No - because customers come in precisely @10 per hour

Store A purchases cases of fertilizer for its lawn-care business from a supplier Store A needs 2000 bags of fertilizer a year. If Store A's EOQ is 40 cases, what is its average inventory level? It does not hold any safety stock. Assume EOQ operating assumptions.

		89
		45
		40
		20

A retail store has the following cycle counting plan.

There are 10,000 "A" (high importance) items that must be counted 6 times each per year. There are 15,000 "B" (medium importance) items that must be counted 3 times each per year.

There are 25,000 "C" (low importance) items that must be counted 2 times per year.

Approximately how many counts of ‘A’ items per day would the stock-taker make? Assume 260 working days in a year.

		200
		119
		231
		94

1. Nataliya's boss in a beer distributing company says: “I have been watching you over the years. I think the only time you really put in 100% is during the summer – sales drop off the rest of the year”. How should she best respond?

	a.	“Boss, the data shows that the summer high (sales) is a seasonal event. I work very hard all through the year! ”
	b.	“Boss, it has nothing to do with my efforts. Don’t you know that the summer high (sales) is a trend?”
	c.	“Boss, you’re a fool! It has nothing to do with my efforts. Don’t you know that the summer high (sales) is a seasonal event?”
	d.	"Boss, these are random events – demand goes up and down at random!”

A generic definition of inventory is ‘anything of potential value to the customer that can be made/acquired/done and stored, in anticipation of the customer asking for it’. Which of the following would most closely match the above definition of inventory?

		A mortgage company hiring an experienced loan processing officer
		Kim K preparing and providing a FAQ section on her latest app 'ScreenShop'
		A student Financial aid office storing blank student loan application forms
		A loan agency preparing and storing a list of interest rates for the past 3 months

Answer 1

Answer to first question :

Waiting line gets formed because customers get served at the same time queue is formed. This is due to service rate > arrival rate

Answer : b) No because the average service rate is higher than the average customer arrival rate

Answer to second question :

Average inventory level = EOQ /2= 40/2 = 20

Answer: 20

Answer to third question :

Total number of counts for A per day

= Number of items x Number of counts / 260 working days

= 10000 x 6/260

= 230.76 ( 231 rounded to nearest whole number )