Graeme Manages a Candy Store in a High Traffic Shopping

question 8

Multiple Choice

Graeme manages a candy store in a high traffic shopping mall where he has collected the following information:
Weekly demand for small candy boxes = 90 boxes
Cost to place one purchase order with the box supplier = $19.80
Cost to hold one box for one year in inventory = $2.45
ead time = 2 weeks
Weeks in a year = 52 weeks
-The current ordering policy for the candy store is 360 boxes so the average inventory level (i.e., cycle inventory) is:

• A) less than or equal to 100 boxes.
• B) more than 100 but less than or equal to 150 boxes.
• C) more than 150 but less than or equal to 200 boxes.
• D) more than 200 but less than or equal to 250 boxes.

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Definitions:

Grants Credit

The offering of deferred payment terms or a line of credit to a buyer for the purchase of goods or services.

Cash Increase

An upward movement in a company's cash balance, indicating improved liquidity or additional inflow of money.

Operational Cycle

The period between the acquisition of inventory by a company and the collection of payments for the goods or services sold.

Accounts Payable Period

The time between receipt of inventory and payment for it.