A manager is controlling an inventory using a planned backorders model. Right now the optimal

Question: A manager is controlling an inventory using a planned backorders model. Right now the optimal order quantity is determined from a critical ratio of 0.9. The manager believes that the ratio may be higher, but is unsure what does a ratio closer to 1 mean, and how it would affect the inventory control. Which of the following statements is/are true? As theA manager is controlling an inventory using a planned backorders model. Right now the optimal order quantity is determined from a critical ratio of 0.9. The manager believes that the ratio may be higher, but is unsure what does a ratio closer to 1 mean, and how it would affect the inventory control. Which of the following statements is/are true? As the critical ratio approaches 1 (that is, as the value increases from 0.9 to very close to 1.0), then
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The expected number of units short approaches 1.
The optimal order quantity approaches the optimal order quantity from an EOQ model.
The optimal order quantity approaches the mean of the demand distribution.
The planned backorder is much larger than the optimal order quantity.
It means that the excess holding cost is nearly zero.
None of the above.
The explanation for the given scenario and explanation for the selected options.- If the critical ratio reaches the value of 1, it directly d…View the full answer