Your Firm Uses a Continuous Review System (Q System), Where $= 14,560$

question 106

Multiple Choice

Your firm uses a continuous review system (Q system) , where the inventory position is updated after every transaction. The firm operates 52 weeks per year. One of the items has the following characteristics:
Demand $= 14,560$ units per year
Ordering cost $= \$ 40$ per order
Holding cost $= \$ 6$ per unit
per year Lead time $= 2$ weeks
Standard deviation in weekly demand $= 100$ units
Cycle-service level $= 80$ percent
If Q is made equal to the EOQ, what are the desired values for Q and R?

• A) Q is between 65 and 69, and R is between 362 and 366.
• B) Q is between 439 and 443, and R is between 559 and 563.
• C) Q is between 439 and 443, and R is between 678 and 682.
• D) Q is between 65 and 69, and R is between 398 and 402.

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Definitions:

Reagents

Substances added to a system to cause a chemical reaction or test if a reaction occurs.

Conversion

The process of changing or causing something to change from one form to another.

Standard Deviation

A measure of the dispersion or variability within a set of numerical data, indicating how far values are spread from the mean.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, crucial for making inferences about a population.