Lead Time Is Exactly 20 Days Long

question 65

Multiple Choice

Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?

• A)20 times 2
• B)20 times 10
• C)2 times the square root of 20
• D)2 times the square root of 10
• E)400 times the square root of 10

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Definitions:

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.

Profit Maximizes

The process or strategy of adjusting production and operations to achieve the highest possible profit.

MC

Stands for Marginal Cost, which is the cost of producing one additional unit of a good or service.