Kelly Opens an Aquarium Store in a Lively Shopping Mall

question 1

Multiple Choice

Kelly opens an aquarium 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 Fluval 303 pump, a high margin and profitable pump, is one of her best sellers, but it stocks out frequently. She collects the following data about the pump's sales.
$\begin{array} { l l } \text { Demand } = 10 \text { units per week } & \text { Store operates } 45 \text { weeks } / \text { year } \\\text { Order cost } = \$ 30 / \text { order } & \text { Lead time } = 3 \text { weeks } \\\text { Item cost } = \$ 80 / \text { pump } & \text { Standard deviation of weekly demand } = 4 \text { units } \\\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Desired service level } = 90 \text { percent }\end{array}$
-The economic order quantity (EOQ) rounded to the next highest number is:

• A) less than 25 pumps.
• B) more than 25 but less than or equal to 35 pumps.
• C) more than 35 but less than or equal to 45 pumps.
• D) more than 45 but less than or equal to 55 pumps.

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Definitions:

Blue-Sky Laws

State laws in the United States designed to protect investors from securities fraud by regulating the offering and sale of securities to the public.

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Securities transactions or offerings that occur across state lines, subject to federal laws and regulations.

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The unjust firing or termination of an employee in violation of legal or contractual terms.

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A process by which employees face increasingly severe consequences for their actions or failures in performance.