1. Assuming that demand varies and can be described by a probability distribution is:
necessary for instantaneous replenishment
a requirement to calculate buffer stock
not valid in EOQ calculations
a component of order cost
2. CharmingBells Inc. has been running into a loss gradually, but the board of directors are reluctant to shut the company down because it has invested millions of dollars’ worth of equipment which can only be used in that industry. Moreover, the people in CharmingBells Inc. have become emotionally attached to the company and do not want the company completely shut down. This scenario best illustrates _____.?
A. high fixed cosst
b. high exit barriers
c. used production capacity
d. unused production capacity