Suppose in the order-up-to model the target in-stock probability is .95 and demand across periods is independent
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Suppose in the order-up-to model the target in-stock probability is .95 and demand across periods is independent and normally distributed. If the lead time is doubled but the target in-stock probability remains .95, what happens to the order-up-to level?
a. It more than doubles (increases by more than a factor of two).
b. It doubles (increases exactly by a factor of two).
c. It increases but by less than a factor of two.
d. It decreases.
e. The answer cannot be determined with the given information.
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Operations Management
ISBN: 9781260547610
2nd International Edition
Authors: Gerard Cachon, Christian Terwiesch
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