In a perishable products model,if the cost of underordering is four times the cost of overordering,then the optimum service level is:
A)1
B)0 8
C)0 6
D)0 4
E)0 2

Question

In a perishable products model,if the cost of underordering is four times the cost of overordering,then the optimum service level is:
A)1 
B)0 8 
C)0 6 
D)0 4 
E)0 2

Quizplus · Accepted Answer

The optimum service level is calculated as the ratio of the cost of underordering to the total cost (underordering + overordering). If the cost of underordering is four times the cost of overordering, the service level is 4/(4+1) = 0.8.

In a Perishable Products Model,if the Cost of Underordering Is