Brenda Opens a Pool and Spa Store in a Lively

question 103

Multiple Choice

Brenda opens a pool and spa store in a lively shopping mall and finds business to be booming, but she often stocks out of key items customers want. She decides to experiment with inventory control methods such as using a fixed order quantity (FQS) and/or fixed order period (FPS) systems. The 28-ounce bottle of Super Algaecide (SA) is a high margin stock keeping unit (SKU) , but it stocks out frequently. Ten SA bottles come in each box, and she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom has time to review store inventory status and order the right quantity at the right time. She collects the following data with respect to these SA sales.
$\begin{array} { l l } \text { Demand } = 10 \text { boxes per week } & \text { Store operates } 50 \text { weeks } / \text { year } \\\text { Order cost } = \$ 40 / \text { order } & \text { Lead time } = 3 \text { weeks } \\\text { Item cost } = \$ 80 / \text { box } & \text { Std. deviation in weekly demand } = 6 \\\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Service level } = 96 \%\end{array}$
-The reorder point for Super Algaecide (SA) with safety stock is:

• A) less than 20 boxes.
• B) more than 20 but less than or equal to 30 boxes.
• C) more than 30 but less than or equal to 40 boxes.
• D) more than 40 but less than or equal to 50 boxes.

---

Definitions:

Operating Procedures

Standardized methods and processes designed to consistently carry out day-to-day tasks and operations.

Management Programs

Structured plans and initiatives implemented within an organization to achieve specific operational, tactical, or strategic objectives.

Flexible Leadership Theory

A management perspective that suggests successful leaders are those who can adapt their style to the demands of different situations.

Direct Behavior

Actions that are deliberate and intentional, often aiming to influence or guide others towards achieving specific goals or outcomes.