Using the Fixed-Time-Period Inventory Model, and Given an Average Daily

question 38

Multiple Choice

Using the fixed-time-period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity?

• A) About 30.4
• B) About 36.3
• C) About 42.3
• D) About 56.8
• E) About 59.8

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Definitions:

Direct Labor

The labor cost directly associated with the production of goods, including wages for workers who physically convert materials into the finished product.

Raw Materials

The basic materials from which products are made, typically not yet processed or used in manufacturing.

Finished Products

Goods that have completed the manufacturing process but have not yet been sold or distributed to end customers.

Labor Costs

The total expenditure incurred by employers to compensate employees, including wages, salaries, benefits, and taxes.