If Average Demand for an Item Is 20 Units Per

question 48

Multiple Choice

If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be

• A)20.
• B)50.
• C)70.
• D)80.
• E)130.

---

Definitions:

Binding Price Ceiling

A maximum price set by the government below the equilibrium price, leading to shortages as the demand exceeds supply.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given time period.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price within a specified time period.

Long Lines

Typically a result of excessive demand or insufficient supply, creating a situation where people have to wait for a long time to avail of a service or purchase a product.