Figure 24-1 Mrs. Brown's Bagel Company Manufactures Specialty Bagels. the Company Buys

question 34

Multiple Choice

Figure 24-1
Mrs. Brown's Bagel Company manufactures specialty bagels. The company buys flour in 50-kg bags that cost £25 each. The company uses 10,000 bags per year, and usage occurs evenly throughout the year.
The average cost to carry a 50-kg bag in inventory per year is £4, and the cost to place an order is £10.
The company works 250 days per year.
Mrs. Brown's Bagel Company manufactures specialty bagels. The company buys flour in 50-kg bags that cost £25 each. The company uses 10,000 bags per year, and usage occurs evenly throughout the year.
The average cost to carry a 50-kg bag in inventory per year is £4, and the cost to place an order is £10.
The company works 250 days per year.
-Refer to Figure 24-1. If Brown's lead time is four working days, the average rate of usage is 40 bags per day, and the company carries a safety stock of 20 bags, the reorder point would be

• A)180 bags.
• B)140 bags.
• C)160 bags.
• D)100 bags.

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Definitions:

Scarce Resources

Natural or human resources that are limited in supply, compelling choices regarding their use.

Willing and Able

Describes individuals who are both inclined and have the capacity to work or engage in economic activity.

Short-Term Shortage

A temporary situation where the demand for a product or service exceeds its supply in the market.

Market Mechanisms

The processes through which the prices of goods and services are established in markets, enabling resources to be allocated efficiently.