A Company Has Average Demand of 30 Units Per Day

question 26

Multiple Choice

A company has average demand of 30 units per day. Lead time from the supplier averages 7 days. Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units. One unit costs $10 and the inventory carrying cost is 25 percent. What is the reorder point for the company if it decides on a 99 percent service level?

• A)243 units
• B)257 units
• C)77 units
• D)210 units

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Definitions:

Organizational Language

The specific collection of terms, jargon, and communication styles unique to a particular organization.

Environmental Diversification

The strategy of spreading out investments or activities across different environmental sectors to reduce risk or achieve sustainability.

Internal Integration

Pertains to the process by which the members of an organization share values, create a collective identity, and work cohesively across internal divisions.

External Adaptation

The process by which an organization or individual adjusts and changes in response to external environmental conditions.