Scenario 9.7 Cranium, Inc., Purchases Term Papers from an Overseas Supplier Under

question 109

Multiple Choice

Scenario 9.7
Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year.
-Use the information in Scenario 9.7. If lead-time increases by three days, what is the reorder point needed to maintain a 98% service level?

• A) less than or equal to 2,400 units
• B) greater than 2,400 units but less than 2,500 units
• C) greater than 2,500 units but less than 2,600 units
• D) greater than 2,600 units

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Definitions:

Growth

An increase in some quantity over time, such as economic growth which refers to an increase in the market value of goods and services produced by an economy.

High Performers

Individuals who consistently exceed standard performance expectations in their roles, contributing significantly to organizational goals.

Stars

In business, it refers to products or business units with high market growth and high market share in a competitive industry.

Growth

Describes the process of increasing in size, value, or importance, typically used in economic and business contexts to refer to the expansion of companies or economies.