Table $5.4$ A Company Operating Under a Continuous Review System Has an Has

question 137

Multiple Choice

Table $5.4$
A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $\$ 30$ to process each order. The holding cost for each unit is $\$ 10$ per year. The company operates 52 weeks per year. You will need to refer to a normal table to answer the question(s) .
-Use the information in Table 5.4. What is the desired safety stock level if the company has a policy of maintaining a 90 percent cycle- service level?

• A) less than or equal to 50 units
• B) greater than 50 units but less than or equal to 100 units
• C) greater than 100 units but less than or equal to 150 units
• D) greater than 150 units

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