A retail drug chain purchases a newly developed drug in pill form from a pharmaceutical firm and sells it to the public. The drug is unique in the sense that its active ingredient expires quickly and the retailer can't sell pills which are purchased more than 30 days earlier. The selling price per 30-day supply (bottle) of pills is $340. Unsold pills have no value and are disposed of at no cost. The marketing forecast for sales is 120,000 bottles per month with standard deviation of 20,000, distributed normally. The pharmaceutical firm sells the drug to the retail chain for $110 per bottle.

Question 19 4 / 4 pts If the retailer increases the value it assigns to the goodwill from donating the drug to the needed to $40 per unit, then the new cost of overestimating demand by one unit is $70 0 $340 $220 $90 Question 20 5 / 5 pts The new service level (probability of satisfying demand) and optimal order quantity with the $40 per unit goodwill are 0.9333, and 130,459 respectively 0.7667, and 134,600 respectively 0.8333, and 122,459 respectively 0.5000, and 120,000 respectively 0.3333, and 162,459 respectively Question 21 4 / 4 pts Which one of the following would NOT be considered a prerequisite for successful Just-in-Time production? Relative stability of demand Sophisticated production and materials planning computer systems Reduced setup times Preventive maintenance of equipment ive maintenance of equipment Reliable deliveries of defect-free materials Question 22 4 / 4 pts In a JIT production system, a production operation is authorized when the production worker is at the work station. when the team leader is ready. when the inventory level at the work station reaches zero. when an authorization is obtained from an upstream operation. when an authorization is obtained from a downstream operation.an authorization is obtained from a downstream operation. Question 23 4 / 4 pts All the following statements related to Just In Time Manufacturing are correct except: Eliminates large portion of the costs related to material handling, storage, paperwork and inspection. Reduces inventory over time Stresses the need to minimize the cost of parts and components from suppliers requires short setup times and preventive maintenance Stresses waste reduction Question 24 4 / 4 pts Which one of the following concepts does the Just-In-Time (JIT) method advocate? Processes are triggered by a pull request based on demand. Full utilization of capacity. Minimizing the idle time. Processes are initiated by a push request based on requirements. Upstream processes run simultaneously with downstream processes.