A Firm Has Determined That Its Optimal EOQ Ordering Quantity

question 24

Multiple Choice

A firm has determined that its optimal EOQ ordering quantity is 1,250 units for a certain product. Average daily demand is 90 units with a standard deviation of 8 units. Order lead time is 7 days. To maintain a 95% service level, what should the target inventory level be?

• A) 1,250
• B) 1,940
• C) More than 2,000
• D) Target inventory level cannot be determined from the information given

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Definitions:

Objection

A statement of disagreement or challenge to a particular claim or argument.

Ad Hominem

A logical fallacy where an argument is rebutted by attacking the character, motive, or other attributes of the person making the argument, rather than addressing the substance of the argument itself.

Smoking

The act of inhaling and exhaling the smoke of tobacco or other substances, typically linked to various health risks.

Dangerous

Involving potential harm or risk; likely to cause damage or injury.