Table $5.10$ A Firm Using the Periodic Review System (P System) Reviews

question 80

Multiple Choice

Table $5.10$
A firm using the periodic review system (P system) reviews the status of an item every 4 weeks. The standard deviation in weekly demand is 60 units. The lead time for the item is 3 weeks, whereas demand averages 200 units per week. You will need to refer to a normal table to answer the question(s) .
-Use the information in Table 5.10. Suppose the firm decides on a safety stock (B) of 245 units. It is time to review the item, and the current inventory position is 700 units. How many units should be ordered? (Hint: Before answering this question, you must first compute T, the target inventory level.)

• A) less than or equal to 900 units
• B) greater than 900 but less than or equal to 950 units
• C) greater than 950 but less than or equal to 1000 units
• D) greater than 1000 units

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Definitions:

Collateral

Represents an asset that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

National Exchange

A nationwide, regulated market for the trading of securities, such as the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ).

TSX

The Toronto Stock Exchange, a major stock exchange in Canada where various securities are traded.

OTC

Over-the-counter, a term used to describe securities trading conducted directly between parties without the involvement of a central exchange.