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

question 17

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 without any safety stock for a fixed-period system (FPS) under the model assumptions is:
$\begin{array} { | l | l | } \hline \text { Demand } & 100 \text { units per week } \\\hline \text { Order Cost } & \$ 30 \text { per order } \\\hline \text { Inventory-Holding Cost } & \$ 0.6 \text { per unit per year } \\\hline \text { Lead Time } & 2 \text { weeks } \\\hline \text { Economic Time Interval } & 5 \text { weeks } \\\hline\end{array}$

• A) more than 100 but less than or equal to 200 units.
• B) more than 200 but less than or equal to 400 units.
• C) more than 400 but less than or equal to 600 units.
• D) more than 600 but less than or equal to 800 units.

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Definitions:

Direct Labor

The wages and salaries of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of goods, such as utilities, rent, and salaries for managers.

Direct Materials

The raw materials that can be physically and directly associated with manufacturing the end product.

Factory Overhead

All indirect costs associated with the production process, such as salaries for supervisors and costs for utilities, not directly attributed to specific units of products.