Question

All of the following coordination problems were present in the forecast-sharing game EXCEPT

lack of trust and trustworthiness

operational obstacles like lead times and MOQs

local optimization

A hospital stocks two surgical supplies on a continuous review basis. Both are replenished on average every three weeks. In addition, both have the same holding costs. When item A is backordered, a different item can be substituted at a cost of about $5. But when item B is backordered, the surgery has to be delayed, costing the hospital thousands of dollars. What is true about the optimal CSL for the two products?

optimal CSL is higher for B

optimal CSL is higher for A

optimal CSL is the same for A and B

impossible to tell

double marginalization

Answer 1

1 ) Local optimization.

Explanation - All the options are the coordination problem were present in the forecast sharing game except Local optimization. Local optimization finds the optimal value if there is no feasible solution with a better function value in the neighborhood.

2) Optimal CSL is higher for A

Explanation - CSL optimal is the quality control test. Where it ensure the final product meet the specification.