Brenda Is the Owner of a Spa Store That Operates

question 2

Multiple Choice

Brenda is the owner of a spa store that operates 50 weeks per year. Spair Shampoo is a high margin stock keeping unit (SKU) , but the product goes out of stock frequently. She decides to use a fixed-quantity system (FQS) and orders boxes of Spair Shampoo containing 10 bottles per box from a vendor 160 miles away. She collects the following data with respect to the sales of Spair Shampoo.
$\begin{array} { | l | l | } \hline \text { Demand } & 10 \text { boxes per week } \\\hline \text { Order Cost } & \$ 40 \text { per order } \\\hline \text { Item Cost } & \$ 80 \text { per box per year } \\\hline \text { Inventory-Holding Cost } & 15 \text { percent per year } \\\hline \text { Lead Time } & 3 \text { weeks } \\\hline \text { Standard Deviation in Weekly Demand } & 6 \\\hline \text { Service Level } & 96 \text { percent } \\\hline\end{array}$
Using the given data, it can be concluded that the economic order quantity (EOQ) of the Spair Shampoo boxes is:

• A) less than 25 boxes.
• B) more than 25 but less than or equal to 35 boxes.
• C) more than 35 but less than or equal to 45 boxes.
• D) more than 55 boxes.

---

Definitions:

Sensation Seekers

Individuals who have a heightened preference for experiences and activities that are stimulating or novel.

Risky

Involving or associated with the possibility of negative outcomes or danger.

Opponent-process Theory

A psychological and neurological model that explains how the perception of colors is achieved by the brain through the activation of opposite (or opponent) processes.

Hedonic State

An individual's experience of pleasure or happiness, often influencing their behavior or decisions.