If It Takes a Supplier 25 Days to Deliver an Order

question 39

Multiple Choice

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

• A) 50
• B) 100
• C) 400
• D) 1,000
• E) 1,600

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Definitions:

Industry Price

The general cost at which goods or services are sold within a particular industry, influenced by supply, demand, and competition.

Marginal Cost

The added expense required to produce one more unit of a product or service.

Fixed Cost

An expense that remains constant regardless of the volume of products or services manufactured or distributed.

Monopoly Profits

The excess profits earned by a monopoly as a result of its ability to set price above marginal costs due to lack of competition.