For each of the following, indicate 'T' for TRUE or 'F' for false. (Note - please only put in the letter 'T' or 'F', not the full word. ***Read these carefully*** T or F:
(Assuming that no other factors are changed) Increasing the order quantity (Q) will increase the fill rate. (Indicate ‘T’ or ‘F’). ____
T or F: (Assuming that no other factors are changed) Increasing the Reorder Point (ROP) will increase the fill rate. ____
T or F: (Assuming that no other factors are changed) Increasing the order quantity (Q) will increase the cycle service level. ____
T or F: (Assuming that no other factors are changed) Increasing the Reorder Point (ROP) will increase cycle service level. ___
Answer 1: True, fill rate is total product supplied/gross requirement of customer. Higher order quantity means higher inventory levels,, and more is inventory -more customers can be filled with product. Hence, higher order quantity means higher fill rate.
Answer 2: True, Reorder point is the minimum amount of inventory that the firm holds. So, higher inventory levels imply higher fill rate.
Answer 3: False, cycle service level is the probability of not hitting stock out position. Cycle service level increases as inventory level increases due to higher order quantity
Answer 4: True, increasing ROP increases inventory levels, means higher cycle service level.
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