Scenario 13.3 - We Have No Bananas

question 9

Multiple Choice

Scenario 13.3 - We Have No Bananas
Weekly demand at the Banana Stand is 200 bananas with a standard deviation of 50.The replenishment lead time is 3 weeks from the plantation in Ecuador.The Banana Stand manager orders 1000 bananas when the inventory drops to 600.Each banana costs $0.50.The holding cost the Banana Stand incurs is 40%.
-Use Scenario 13.3 to answer the question.What is the cost of understocking?

• A)$0.02
• B)$0.03
• C)$0.04
• D)$0.05

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