Scenario 12.2 - Hamsterdam

question 60

Multiple Choice

Scenario 12.2 - Hamsterdam
Marlo Stanfield's operation also uses large quantities of prepaid cell phones,on average 1500 per week with a standard deviation of 145.The lead time for their own brand of prepaid cell phones is three weeks and they have a lot size of 350 phones.To ensure they never run out,they keep a safety stock of 500 phones with Proposition Joe.
-What safety stock should be held to put the expected shortage per cycle at 5 phones?

• A)418 phones
• B)433 phones
• C)462 phones
• D)487 phones

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Definitions:

Required Return

The minimum rate of return an investor expects to achieve from an investment, considering its risk.

Expected Dividend

The forecasted payment of profits by a corporation to its shareholders, usually announced by the company's board of directors.

Dividend Growth Rate

The rate of growth in a company's dividend payments, expressed as an annual percentage.