The Franklin County Hospital Is Currently Using a Continuous Review

question 157

Multiple Choice

The Franklin County Hospital is currently using a continuous review system to control its inventory. One of the items in inventory is an elastic band. The average demand for this item is 200 boxes per week, and the standard deviation in weekly demand is 50 boxes. If the lead time is 3 weeks and the hospital wants a 99 percent cycle- service level, what is the reorder point for this item? A normal table is appended to this exam.

• A) less than or equal to 650 boxes
• B) greater than 650 boxes but less than or equal to 750 boxes
• C) greater than 750 boxes but less than or equal to 850 boxes
• D) greater than 850 boxes

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Definitions:

Fair Value

The estimated price at which an asset or liability could be bought or sold in an orderly transaction between market participants.

Goodwill

A non-physical asset that comes into existence when a company is purchased at a price higher than the fair market value of its net identifiable assets.

Book Value

The net value of a company's assets found on its balance sheet, minus liabilities, often compared to market value for analysis.

Market Value

Market value is the existing price point at which you can buy or sell an asset or service within a marketplace.