Scenario 13.3 - We Have No Bananas

question 13

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.Suppose the Banana Stand decides to cut their lot size in half.What is the new customer service level?

• A).65
• B).60
• C).55
• D).50

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Definitions:

Working Capital

The gap between a firm's immediate assets and its short-term obligations, reflecting the funds available for daily operations.

Quick Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its most liquid assets.

Accrued Product Warranty Expense

A liability recognized on the balance sheet for potential future costs related to warranty claims on products sold.

Pension Plan

An arrangement for retirement that mandates contributions by an employer to a reserved fund aimed at providing for an employee's needs in the future.