Table 1
Peterson Enterprises Uses a Fixed Order Quantity Inventory $= 50,000$

question 31

Multiple Choice

Table 1
Peterson Enterprises uses a fixed order quantity inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand $= 50,000$ units/year
Ordering cost $= \$ 35 /$ order
Inventory-carrying cost as a percent of item value $= 25 \%$
Item (Unit) value $= \$ 8$
Lead time $= 3$ weeks
Standard deviation in weekly demand $= 125$ units
-Using the information in Table 1, if Peterson wishes to provide a 97 percent cycle service level, what is the reorder point?

• A) Less than or equal to 2,800 units
• B) Greater than 2,800 but less than or equal to 3,200 units
• C) Greater than 3,200 but less than or equal to 3,600 units
• D) Greater than 3,600 units

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Definitions:

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