Scenario 12.1 - Charm City

question 28

Multiple Choice

Scenario 12.1 - Charm City
Avon Barksdale's operation uses large quantities of prepaid cell phones,on average 500 per week with a standard deviation of 45.The lead time for their own brand of prepaid cell phones is two weeks and they have a lot size of 125 phones.
-What is the average flow time of a phone if the reorder point used by Mr.Barksdale is 2000 phones?

• A)1.74 weeks
• B)1.87 weeks
• C)2.00 weeks
• D)2.13 weeks

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Definitions:

Marginal Utility

The augmented joy or usefulness a shopper obtains by buying an extra unit of a commodity or service.

Utility Maximization

The economic principle that individuals seek to allocate their resources in a way that maximizes their satisfaction or utility.

Consumption

The spending on goods and services by households or individuals.

Marginal Utility

The supplementary satisfaction or benefit obtained from using an additional unit of a product or service.