What is the cost of a stockout if a candy bar cost $2 and when it is out of stoc

Question

What is the cost of a stockout if a candy bar cost $2 and when it is out of stock, 25% of the time, the customer buys nothing but 75% of the time they just buy a different candy bar?

$0.25

$0.75

$0.50

$0.0

3 points   

QUESTION 23

The forecasting method that uses the average of the demand for the past n periods is _____

Exponential Smoothing

Simple Regression

Weighted Moving Average

Moving Average

3 points   

QUESTION 24

During which stage of S&OP would a firm make sure they have a plan with supply chain partners in the event something goes wrong?

Executive Review

Consensus

Preperation

Demand Review

$0.25

$0.75

$0.50

$0.0

Explanation / Answer

Q22) $ 0.50

25% of the time when customer buys nothing, if the candy bar is out of stock, it results in lost sales. Therefore stockout cost = $2 * 25% = $ 0.5

Q23) Moving average

Moving average method uses the average of previous n-periods actual demand as forecast of the next period. Simplest moving average is naive foecast, which is 1-period moving average.

Q24) Executive Review

Executive Business Review is the fifth step of S&OP process. The first four being (1) Innovation & Strategy review (2) Demand review (3) Supply review and (4) Financial integration. Executive review is done at enterprise level. Its purpose is to assess risks and ensure that there are alternate plans in place to mitigate those business risks in association with supply chain partners. Both internal and external suppliers are part of this step.  

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