Using the Data Regarding the Inventory Management of a Stock-Keeping

question 14

Multiple Choice

Using the data regarding the inventory management of a stock-keeping unit shown in the following table, it can be concluded that the optimal replenishment level with safety stock for a fixed-period system (FPS) under the model assumptions is:
$\begin{array} { | l | l | } \hline \text { Demand } & 140 \text { units per week } \\\hline \text { Order Cost } & \$ 30 \text { per order } \\\hline \text { Inventory-Holding Cost } & \$ 0.4 \text { per unit per year } \\\hline \text { Lead Time } & 3 \text { weeks } \\\hline \text { Economic Time Interval } & 7 \text { weeks } \\\hline \text { Standard Deviation in Weekly Demand } & 8 \\\hline \text { Acceptable Service Level } & 95 \text { percent } \\\hline \text { Standard Deviations to Achieve the Acceptable Service Level } & 1.645 \\\hline\end{array}$

• A) more than 1,350 but less than 1,550 units.
• B) more than 1,550 but less than 1,650 units.
• C) more than 1,650 but less than 1,750 units.
• D) more than 1,750 but less than 1,850 units.

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Definitions:

Set Notation

A mathematical notation used for describing a collection of distinct objects, typically in the form of {a, b, c,...}.

Solution

The value or values that satisfy an equation, inequality, or system of equations.

Absolute Value

The distance of a number from zero on the number line, disregarding whether it is positive or negative.

Set Notation

A system of symbols and terminology used to define and describe sets and their relationships in mathematics.