1 INSE 6290 – Quality in Supply Chain Design Fall 2017, Instructor: Dr. Chun Wang Recommended Readings 1) Lecture notes: Lecture 1, Lecture 2 and Lecture 3 (can be found in Moodle) 2) Reference: Simchi-Levi Chapter2 (available in the library; see course outline for the complete title of the book) Assignment 1 Due on Sep. 27, 2017 , submitted through Moodle. Assignment weight: 5% Special instructions: 1) Your will have needed background to answers questions 7, 8, 9, and 10 after Lecture 3. Questions: 1.Consider the continuous review policy (Q, R). Explain why the expected level of inventory before receiving the order is 𝑧 × ??𝐷 × √𝐿while the expected level of inventory immediately after receiving the order is 𝑄 + 𝑧 × ??𝐷 × √𝐿2.Consider the base-stock in periodic review. Explain why the expected level of inventory after receiving an order is equal to 𝑟 × 𝐴𝑉𝐺 + 𝑧 × ??𝐷 × √𝑟 + 𝐿while the expected level of inventory before an order arrives is 𝑧 × ??𝐷 × √𝑟 + 𝐿3.Imagine that you operate a department store. List five products you sell, and order them from lowest target service level to highest target service level. Justify your ordering. 4.Although we typically model inventory-related costs as either fixed or variable, in the real world the situation is more complex. Discuss some inventory-related costs that are fixed in the short term but may be considered variable if a longer time horizon is considered. 5.When is a model such as the economic lot sizing model, which ignores randomness, useful? 6.What are the penalties of facing highly variable demand? Are there any advantages?