If Freemantle Engineering Company Has a Safety Stock of 36

question 120

Multiple Choice

If Freemantle Engineering Company has a safety stock of 36 units of a particular item and the average monthly demand is 270 units,how many days can be covered if the shipment from the supplier is delayed by 12 days? Assume a 360 day year.

• A)8.0 days
• B)12.0 days
• C)4.0 days
• D)6.7 days

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Definitions:

Surplus

The situation in which the quantity of goods produced exceeds the quantity demanded, often leading to a drop in prices.

Supply Increases

Refers to a situation where the quantity of a good or service that producers are willing and able to sell at a given price level rises, often leading to a decrease in prices if demand remains constant.

Equilibrium Price

The cost at which the amount of a product or service being sought after matches the amount being offered, resulting in a stable market.

Equilibrium Quantity

The quantity of goods or services supplied is exactly equal to the quantity demanded at a particular price.