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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