If Average Demand for an Inventory Item Is 200 Units

question 78

Multiple Choice

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

• A)100 units.
• B)200 units.
• C)300 units.
• D)600 units.
• E)700 units.

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Definitions:

Profitability Index

A calculation used to assess the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Internal Rate Of Return

A financial metric used to estimate the profitability of potential investments by calculating the discount rate that makes the net present value of all cash flows equal to zero.

Discounted Cash Flow

A financial analysis technique that estimates the value of an investment based on its expected future cash flows, discounted back to their present value.