If Mean Daily Demand Is 20 Units,lead Time Is 7

question 48

Multiple Choice

If mean daily demand is 20 units,lead time is 7 days,the standard deviation of demand during lead time is 12.0 units,and management has a preferred service level of 99.9% (z = 3) ,the reorder (R) level for the item would be

• A) 176.00 units.
• B) 56.00 units.
• C) 152.00 units.
• D) 104.00 units.

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Definitions:

LIFO

"Last In, First Out," an inventory valuation method where the last items put into inventory are the first ones sold.

Merchandise

Goods purchased by a company for the purpose of selling them to customers, typically referring to products in retail businesses.

Ending Inventory

Ending inventory is the total value of all unsold goods a company has at the end of an accounting period, calculated before the new fiscal period begins.

Retail Method

An accounting method used to estimate the ending inventory and cost of goods sold based on the retail price of merchandise.