The Annual Demand for a Product Has Been Projected at 2,000

question 142

Multiple Choice

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.The purchase cost is $40 per unit.There are 250 working days per year.Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days.Currently, the company is ordering 500 units each time an order is placed.What level of safety stock would give a reorder point of 60 units?

• A)10
• B)14
• C)18
• D)12

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