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

question 70

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.Currently,the company is ordering 500 units each time an order is placed.Assuming the company uses a safety stock of 20 units resulting in a reorder point of 60 units,what is the expected lead-time for delivery?

• A)4 days
• B)5 days
• C)6 days
• D)7 days
• E)None of the above

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Definitions:

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